Thoughts on Startups - Especially in Todays Economy

Where to start?

Try this analogy. Have you ever seen a house that probably started as a small starter home and was expanded as the owners either earned more income or added children? Most of these homes are probably functional, not optimal and certainly not pretty. This is how most companies grow - organically. You start with a basic need and build what is demanded next. Usually functional but shortly the structure just doesn't work for the long term.

What if the house was first built with expansion in mind? Built with fore thought so nothing needs to be redone like moving a bathroom or breaking the slab and digging a basement. This is possible in home construction and an imperative for growing a company.

What is the foundation for startup companies?

Today we will cover What, tomorrow the How.

What
Research

• Understand Economic Trends (economic stage - contraction, trough, expansion, or peak - each has it's own demands and corresponding best practices)
  
• Market Research (based on economic stage - impact on your industry)
  
• Identify Best Customers (based on economic stage - impact on potential industries/customers with the highest economic return with needs that match your offer)
  
• Competitor Research (based on economic stage - their response to the economy and the nature of their offer)

Focus

• Clarity of Purpose (Brand and Strategy - when people think of your company - what image does it create in the customers mind; given the economic stage, competitor response and their brand image - which customers have the greatest need with available budget; which initiatives must you undertake and how are you going to align the organization to service those accounts )
  
• Role Models (Fake it till you make it - act like you are leading a major corporation from day one and make those practices part of everyone's daily habit)
  
• Distinguishing Mission Statement (Brand on the inside - clarity on what value you provide to whom and why it makes a difference)

Structure

• Rapid Response (what are the rules for dealing with customer issues - how will you satisfy their needs and deal with mistakes)
  
• Challenging Work (you need talent and can't pay for it - how do you make the job challenging and fun to compensate for low pay and long hours)
  
• Local Control (make sure people can do their jobs without micromanagement so you can focus on bigger issues)
• Technology (how are you going to manage the sales funnel and service accounts; usually the early application of some type of CRM, customer relationship management, software or platform to automate the process and reduce mistakes)
  

From our research on startups in Stage I - Dream to Plan, these 11 attributes are essential to opening your doors. Once you start selling it becomes very difficult to perform rework on the plane inflight.

Tomorrow we will cover the basics of how you quickly move from the dream to a winning plan and opening for business.

New Direction, Same Best Practices

Just a quick note to our readers. We have changed the focus of our blog dedicated to misc. ramblings from living in the corporate consulting world. We will continue to skewer stupidity when ever and where ever it is encountered, however dealing with the governments mismanagement of the economy requires we add economic insights to one of our blogs.

The current government induced economic contraction has forced us, like most businesses of our size, to change our focus from growth to survival. It doesn't change our underlying library of best practices, it only changes the application.

We are adding a new economic reporting business unit to provide you with the latest information to save your business, to save everything you have invested to date.

Tomorrow marks our new news unit.

Ciao and keep your head - we will win. Whenever entrepreneurs and government bullies tangle, entrepreneurs win! The reason, if they were as smart and dedicated to preserving wealth, they would not work for government. We can invent and therefore resist faster than they can legislate.

The 20/20 Solution - What is Your End Game?

A couple of quick notes – check out our news service from YouTube. This week we are featuring the true US monetary problems. My apologies to our non-American readers but given the size of the US economy, we want to supplement the main stream news services because they don't deal with the root cause behind issues. Additionally all developed and developing countries are experiencing the same problem; growing entitlement programs as reoccurring liabilities that eventually crowd out all other expenditures. As you review the YouTube segment, understand we are business scientists and economists – not politicians – and therefore take no position on who is in power, only their programs.

Additionally we are running a poll on two issues that will shape our next segment of Inc blogs – what is your end game for the business and what is its current growth stage – please take a couple of minutes and complete the polls in the left margin.

Now for this weeks topic – the 20/20 Solution

If you were a renegade from the corporate world before moving into the ranks of the self employed, you recognized this weeks advice on Inc. I was summarizing the techniques of lean manufacturing applied to startups and early growth stage companies. I will expand on those ideas over the next week.

The Poll and what it means?

How to grow your business is not a very difficult question to answer, the complication is What. Your decision on the end game is critical because it drives all other decisions about growth. As we discussed in an earlier blog, there are no right or wrong decisions - all the decisions are neutral until evaluated against your four general choices:

• Liquidate - at the end, you sell everything off and walk away
• Sell - you sell the existing business to new ownership
  
• Merge - another company purchases the business and merges it with an existing company
  
• Sustain - you intend to grow the business and hand it off to professional management; keeping it private or going public through an IPO
  

Given your decision on the end game, what are the factors to consider to establish a long term growth plan that maximizes your resource investment of time, energy, and money?

	Capital	Labor	Customers	Infrastructure	Core Issue
Liquidate	Create and hold cash	Outsource	Low investment High return	Minimal	Ease of disposal
Sell (Purchased as stand alone)	Invest in appreciating assets	Outsource	Low investment High return	Minimal	Balance sheet
Merge (Purchased to merge with existing business)	Invest in growth	Insource	Niche leader	Sufficient	Brand Customer base Infrastructure
Sustain (IPO or Privately Held)	Invest in growth	Insource	Market Leader	Robust	Brand Reinvention

We assembled our group of experts in the Angel Investment, Venture Capital, Mergers & Acquisition, and Brokerage disciplines to compile this chart. Tomorrows blog entry will detail of the categories and the rationale for each item. Please record any questions you have in the Comment Section or in the One2Many chat window.

Thanx and talk with you tomorrow.

Welcome Inc bloggers

Poll Directions – on the left side of the page are two polls important to next weeks Inc's blog. The first poll asks about your end game – when the time comes for you to leave the business, how will that happen? The second poll asks about your current stage of growth - what are the real priorities demanding immediate attention and what can be postponed to a later date? We intend to build next week’s article from your responses – so decide what we write!

Your End Game

Instead of discussing the pro’s and con’s of your end game options, lets start the discussion by working backwards – How are Businesses Valued? When an outsider looks at the business - how is value determined? By understanding how they will view the business, you can make a better decision about your growth strategy. There are three methods used by business brokers, merger & acquisition firms, and venture capitalists to determine value:

• Net Asset Value
• Market Multiple Value
• Income or Discounted Cash Flow Value

Net Asset Value looks at the market value of components of the business. It works well for acquisitions where the buyer wants individual pieces, not the whole operation. Some times the individual parts are worth more than the whole and this is a method to pull value out. It works well for companies that are comprised of mostly hard assets like real estate and natural resources.

Market Multiple Value looks at the expected earnings and cash flow over a period of time generated by the entire operation to establish a formula. The valuation establishes the worth of the business like 2 or 3 times sales. It works well for mergers where the buyer wants the operation to improve or enhance an existing business. In addition, it works well for companies comprised of soft assets like brand reputation and knowledge.

Income Value looks strictly at cash flow over a period of time. It's valuation is a function of how much this additional cash flow is worth to the acquiring business. It works well with companies that have large and predictable high velocity cash flows like pay day loans, pawnshops, bars and clubs.

Here is my rationale, if you know how the business will be valued, that should determine which growth strategies make the most sense. For example, if your end game is to grow and sell, then investing in either hard assets or functions that improve the amount and velocity of cash flow make sense. Making sizable investments in human resources or infrastructure will actually decrease your valuation! These investments make sense if your end game is to grow and hold such as taking the company public and the value will be captured as part of a Market Multiple approach.

We will investigate this further on next week’s 1:1 meeting @Inc. blog.

You Must See This Movie - IOUSA

We typically don't involve these blogs into the world of politics. However, occasionally there are issues that transcend politics because of its potential impact on the economy. As entrepreneurs, there are 26 million solopreneurs and small business (under $50m in revenue) in the United States representing 40% of the jobs, there are issues that cannot go unnoticed. We have been on this story for quite awhile and used these projections into our growth plans - our editorial board this information should be shared.

Review and let me know your thoughts.

5 Disciplines of Harp Corps

Although I wrote this 3 years ago while building an entrepreneur's version to the Franklin Covey self-management system, I thought a brief review is in order (see link above for the entire article).

I once said that being an entrepreneur was a calling, like perhaps a priest – rabbi – imam. That was not a flip remark; I have great respect the people who answer that call. Like a priest or even better a monk, if we are going to self-manage – we need rules to live by. Taking a page from the Order of Saint Benedict and their Benedictine rules, here is my operational version, the rules of hard corps:

• Embrace Objective Reality
• Understand Your Talents (and Weaknesses)
• Clarity of Purpose
• Courage to Walk Your Path
• Persist as Long as You are Right

Let me now superimpose research conducted over 20 years ago by Warren Bennis, the great commentator on Leadership. In his study of effective leaders in the public and private sectors – he identified five behaviors or disciplines they all had in common which I have slightly embellished:

1. Create a Compelling Vision of the Future
2. Fanatical Focus on the Critical
3. Embody Your Reality
4. Communicate to Inspire
5. Empower a Movement

Over the next five days, I will detail each discipline for the start-up entrepreneur.

1. Create a Compelling Vision of the Future

Your Future Must Make a Difference. Whatever vision you paint, it must have meaning beyond you and the boundaries of the organization. You are looking to inspire people to sign up and join so being focused on just you or the company will not provide a compelling case. People love being part of something greater than themselves.

• Example: our corporate vision is to change the math of business success. Entrepreneurs risk everything to turn a dream into reality, and the odds are against us. Within 7 years, statistically we all will go belly up! What if we could just raise the odds of success by 10%? With 25 million small businesses in the United States that is 2.5 million more successful entrepreneurs.

Encompass the Human Condition by Helping. Ultimately all organizations are about some good created for others. Whether this is humanity in general or the local community, we must provide value. Helping is just another way of saying – we provide value that people are willing to pay for.

• Example: our corporate vision is to address the entrepreneurial fear of risking everything, the fear of no presents under the Christmas tree, the fear of no food on the table or power in the middle of the winter, or the fear of losing the house. All entrepreneurs in the early stages live with this unrelenting terror, and if you are not one – you just won't get it. Our difference – we do and have built an organization to make the terror manageable.

You Must Believe in Yourself and Your Abilities. Entrepreneurs are not surrounded by much support, formal or informal. Most of our family and friends think we are a couple of bubbles off center for leaving the security of a paying job. Banks are certainly not an ally – try to get a loan when it is the difference between live or death. If you don't believe in yourself, nobody else will and you will play it safe which usually becomes a disaster. Entrepreneurs are not river boat gamblers, they take calculated risks but it is a risk just the same.

• Example: our corporate vision is take out most of the cost of knowledge and sell it to a highly fragmented and unsophisticated market. This is not about the intelligence of business owners, they simply don't have much experience with buying help and have no idea of what to buy or what to pay. Think selling this idea to our investors has been easy? I could return to large corporate consulting, make $3,000 a day and live comfortably.

Appeal to Everyone's Best Angels. Negative messages don't work, politicians that focus only on the negative lose elections. Also we live in societies that are geared to the lowest common denominator. Building a world class organization is about elevating everyone; employees, clients, suppliers, and investors. Feeling good about oneself is a function of success.

• Example: our corporate vision is to raise the bar for entrepreneurship, to appeal to the courage of business owners and help them make the dream a reality. Since we are living the same reality it starts with us. We are constantly pushing the bar higher and higher within to ensure will can do it outside.

Demand Everyone's Best Effort. This is about a balance between impossible and difficult. If people are going to rise to the occasion, they must be challenged to bring their A game every single day.

• Example: our corporate vision is to work collaboratively and be supportive, but to also tell the hard truths. Accountability is a two way street and our clients will honor their commitments to same the level we will or we will not do business together for long.

I find these behaviors to be true and effective, whether I look back on my past, review the literature of effective leadership, or the success of our clients.

Next post will discuss discipline 2., the Fanatical Focus on the the Critical.

Cant' Self Motivate - Can't Self Manage?

Wasted 3 days this week, can't seem to self motivate and therefor self manage. One big transition for me is the move toward becoming a survivalist in preparation for the coming disaster of America's suicide. Given the countries political incompetence, we have created a government and society that is not sustainable. A government that makes the wrong promises is having two unacceptable consequences: a society of dependence and a series of undeliverable expectations. People believe this government, regardless of political party, will take care of them and are living with that expectation. Our spirit of self reliance and independence has been seriously damaged at exactly the time when it will be the difference between living a life worth living and merely existing. The unfunded mandates coming due over the next 20 years will force the government to raise taxes on the remaining workforce to a level that will destroy the economy at the same time it reneges on those the promises leaving people destitute. The only people who will prosper are the self reliant and most of them are entrepreneurs and business owners.

I need to redeploy the principals of hard corps to self motivate and self manage. As I review my life, the greatest success occurred when I knew the rules and had a clear path to that success, and then made the purpose behind all activities; professional and otherwise, its achievement. My greatest success was working through the ranks as an enlisted member of the Coast Guard to attend OCS (1 of 18 from 2,000 candidates) and become an officer. Since that time, with every business venture, although successful - I have never achieved at the same level.

That is the excitement, at a very personal level, of building the library of best practices. I built it as much for myself as for my global brothers and sisters - entrepreneurs. My posts of the next weeks will be to address those principals and detail our path.

Starting Smart, Starting Cheap

I am writing this for all of our colleagues in the startup mode that either haven`t purchased their computer systems or are thinking of upgrading. If you are a subscriber or a casual observer of our blogs, you know our commitment to open source. However, don`t view this as a recommendation for moving to a linuxOS, see it as putting your toe in the water. For all of my MAC users, sorry this doesn't apply.

Instead of purchasing the entire MSSuite (word, powerpoint, access, excel, etc.), check out Open Office from Sun MicroSystems. It doesn't have all the whistles and bells of Microsoft`s package, it just has the ones we consistently use and IT IS FREE! You can work in its complementary programs (writer, impress, base, and calc) with the same functions as Microsoft and save your work in documents that are fully functional in MSSuite.

The only challenge is there is nothing at the moment to replace Outlook. This is where Mozilla steps in. By now you have seen all of the hype and even downloaded their browser Firefox. Mozilla (Netscape) has come to rescue with a free email client Thunderbird.

Thunderbird has all of the email and newsgroup features of Outlook and when you add their calendaring system - Lighting, it has everything you need to abandon Outlook. Lighting has the additional features of synching with icalendar formats like Google Calendar to create an online and sharable calendar with you clients, partners, and suppliers. You can even synch it with your phone or pda like our nokia n800 internet appliance to create one calendar that follows you around. It is the perfect solution to the mobile Solopreneur that is trying to look and perform big without the overhead.

Lets review the bidding. Instead of spending $300-$500 for bloated programs where a typical user applies 20% of its capability, you can create all of the software infrastructure of a large organization for FREE.

Check it out by Googling Open Office, Firefox, Thunderbird, and Lighting. Download the programs and within one afternoon you can achieve more for less.

Now I will have you ready for the next leap. Have an old computer that struggles with 98 or XP, and will not run Vista? How about a free linux operating system like Ubuntu that will make your 3 year old computer run like a new $1500 box?

Stay tuned....

This blog was written @30,000 feet on a nokia n800, my handheld VIA (virtual internet assistant)

sticking to the knitting

Something to consider when the business is young and short of mothers milk - cash, there is a tendency to say yes to anything that will generate revenue. Think twice before grabbing for the cash. We took on a project that demanded operating outside established procedures and that caused several uncommon errors. We have now threatened the revenue, but more importantly we risk our reputation and 11 months of courting the account.

Would we do it again? You bet but only after making sure we have made the process changes.

The Quick or the Dead

I was reviewing my personal “rutter” last night and came across an article I wrote several years ago about how to start a business fast.; and what I meant by fast was moving from conception (Stage I) to cash flow neutral (Stage II) in the shortest period of time. The following was my research and the script we are currently using to grow the company.

Executive Roll

• Create Thought Leadership through products
• Create Thought Leadership by adding services to the products
• Physically and behaviorally representing the message (brand)
• Practicing the executive competencies ala Drucker's “Effective Executive”
• Coalescing the multiple messages into ONE
• Mastering Public Relations

Company Script

1. Identify market with under/unserved needs with high economic potential
2. Build the best possible team of subject matter experts, executives, and entrepreneurs with high octane energy
3. Go to market with the absolute minimum product and service offer in the minimum time while staying within the brand
4. Do whatever it takes to delight early customers, spare no expense to make everything and everyone referenceable
5. Develop and Research (not R&D – that's backward) inside customer accounts to close quality gaps on products & services, and develop metrics to measure our performance

So far our report card:

1. A - under $20m companies with self imposed constraints on growth
   
2. C - too concerned about cash flow and giving too much away early, need to be able to survive several financing rounds
   
3. C - engineer in me built too much, too many features, too complicated
   
4. A - made no money on the first clients, but worked out the bugs without harming clients
   
5. B - in the middle of building Generation 2 Assessment and automating the reporting and feedback process
   

It appears to be working as we roll out our offer of a lost-cost, high-quality business assessment that identifies gaps preventing our clients (and ourselves) from growing as fast as possible – a growth rate that exceeds the the market and our competitors, and is sustainable.

eastman

Having a Bad Day

The days simply pile up, all of the normal frustrations of solopreneurship focused on a single event – I must know everything because I must do everything therefore mistakes are many and costly.

Because of being beguiled by new (free) software from Microsoft and the inadvertent installation of server software, the entire system was reinstalled costing over a week in time, $400 in direct costs (services), and the loss of hundreds of dollars in legal but unretrievalable software.

Being an executive, regardless of the company’s size, is a balance of paradoxes; trying to balance learning against immediate action, and usually leads to huge failures. It is a wonder any of us last long enough to make it financially as well as emotionally. We live in world designed and built for the 95% that are secure in the knowledge that someone else is signing their checks, and therefore deciding their worth.

I do not want special consideration, just a society that gets it instead of being villainized at every opportunity.

We are not sheepeople, livestock to be herded at the whim of the unproductive to produce more milk or meat for their latest avarice.

It’s All About You (and the laws of business)

Summary. Given all the factors used to predict success when starting and growing a business - the personality and talent of the founding solopreneur is the most critical, far more significant than the original business idea. You must know the laws of nature to work in the sciences and the same is true here – what are the universal laws of business demanding accommodation like gravity. Businesses fail to reach their potential not because of the initial idea, but because the founder cannot grow and change to fit the circumstance. The challenge is always bigger than you, it is about how to deploy your talent by emphasizing strengths and mitigating weaknesses.
The laws of nature relevant to understanding business:

• Law of Systems – understanding the uncontrollable and controllable factors effecting the market and then creating a picture (map) of the strategic landscape


• Law of Organizing – methods for aligning and integrating business; structure, control, and processes


• Law of Cycles – the stages of business development and tactics for building systems, process, and infrastructure incrementally

Law of Systems is about processes, inter-relationships, and control. It’s the recognition that the behavior of any part of a system (a collection of processes and sub processes) has some effect on the entire system; and when individual components are performing well, the system as a whole is not necessarily performing equally well. A systems model generally has two parts—variables that can be controlled (Adding Value) and uncontrolled (Resources, Consumption, Environment). That means by understanding the uncontrolled factors influencing suppliers, customers, raw materials, etc., I can design a response in the areas under control (business model, service processes, production processes, etc.) that takes advantage of any gaps between what people want and what is available. A systems perspective in business has many applications but during the early stages, it provides a methodology for analyzing the market and designing strategy.

• Resources: patterns or trends that drive the type and use of raw materials – your fuel


• Adding Value: patterns or trends that drive how you provide value by enhancing raw materials to be worth what you charge – the engine


• Consumption: patterns or trends that drive why customers purchase and how they derive value from what you add – the passengers


• Environment: macro patterns or trends that transcend companies, regions, and continents which influence resources, adding value, and consumption – the network of roads, availability of gas stations, income of the passengers

Law of Organizing represents a method of analyzing and building an aligned and integrated operation, it provides a path for action to sequence which components of the business to build incrementally. The key variables that drive tactics in your operational script:

• Processes: Financial, Customer, Strategy, Production, People
  


• Control: Direct Supervision, Input, Throughput, Output, Mutual Adjustment


• Structure: Apex, Operating Core, Mid-Level, Technology, Support

Law of Cycles are the predictable but not pre-ordained stages of business development. As covered previously, the early stages will occur as the business matures but real success happens much later and without guarantee. Perform well enough and you will progress, do not, and suffer premature death.

I Concept: turning your dream into an initial plan with enough detail to start and is sufficiently right to build upon over time. Creating a comprehensive business plan that serves as a living operational script.

II Startup: Obsession with finding customers to create and stabilize cash flow, spreading or sharing risk throughout the value chain with customers, suppliers, stakeholders, and employees.

III Adjustment: reviewing the initial business plan against reality and updating, building the first level of core processes, hiring the first wave of people, enhancing the current offer and/or creating new products and services to take advantage of uncovered opportunities.

IV Growth: building infrastructure – the next level of core processes – the heart of the house, the professionalization of management, and the second wave of hiring. Growth is at its most extreme and will expose defects in purpose, process, structure, and people.

V Balance: growth is sustainable and real profitability is achieved, executives focus on the future while management focus on the present, 25% of your revenue is from NEW products and services, and the company’s assets and operations are optimized – getting all it can deliver.

The power of this approach is combining the three laws of business into a single model (Business Development Cycle—BDC®) which provides an immediate script to focus energy now and determine what is next. You cannot do everything in the beginning and making the attempt prevents you from focusing scarce time and resources on the most critical. Building a successful business is incremental even when it is an internal startup in a large corporation.

rule of hard corps

Another excerpt from my upcoming book ‘hard corps – the order of entrepreneurship’ and how this Type 1 TRIES to live

I once said that being an entrepreneur was a calling, like perhaps a priest – rabbi – imam. That was not a flip remark; I have great respect the people who answer that call.

Staying with this analogy because of the shared ‘nakedness’ of the roles – your personality, traits, strengths, weaknesses are on public display for all to see. Human nature seems to relish ignoring the 95% good to see the 5% bad: those times when behavior does not match our words. Since perfection is not possible, these high profile roles are performed in a most unfavorable environment of gotcha and the called have the farthest to fall. Integrity is easy to lose and the most difficult personal failing to overcome.

Like a priest or even better a monk, if we are going to self-manage – we need rules to live by. Taking a page from the Order of Saint Benedict and their Benedictine rules, here is my operational version, the rules of hard corps:

1. Embrace objective reality. With so much riding on how we spend our time, what decisions we make, and how we follow through – you must deal from a solid base anchored in reality. The truth is and has always existed separate from the observer and is not relative to the interpretations of you and me, it is not subjet to how we 'feel.' You must seek it out.


2. Understand your talents (and weaknesses). Given the all-encompassing nature of entrepreneurship: your first choice is whether to join the ranks of the self-employed, and the second is what value can you create. You must have the ability and the passion to survive what few can endure.


3. Clarity of purpose (and results). There is a strange dynamic afoot in the universe – people who are clear about what they want create those opportunities. Do not ask me to explain it, I have witnessed it enough to believe there are forces at work I do not understand. If you have accurate information and match that with talent and passion – you will know if this life is for you and over what you will do an all nighter. The nature of this journey is self-absorption and many sleepless nights.


4. Courage to walk your path. Living on purpose is difficult enough in today’s feel good everything is relative culture. But when your path is unique, when it is big, when it requires unfathomable levels of confidence – the sheepeople attack. You make them look (and feel) bad and their role becomes looking for your 5% to use as tools to ridicule and destroy. “How dare you be so sure of yourself!” Also, when the first rule is to embrace truth (objective reality), this involves much discomfort. You not only need courage just walk your path, but the courage to deal with the consequences of your actions. It is the dealmaker or breaker for success.


5. Persist. So many success stories are less about business models or better mousetraps than how the founder, the visionary, the leader stayed the course through all of life’s unsettling events. If it were easy, it would have been achieved already. I have been working on a business idea that has survived three failed startups, a sure contract, an in-the-bag VC funding deal, and a bunch of liars. Now after 8 years – I am months away of realizing my dream.

These are my personal rules, the rule of hard corps. Only you can manage yourself and only through self-management can you succeed in business or in life.

Hard Corps #2

I am in the process of finishing a book on self-management for the startup entrepreneur called ‘hard corps’. The following is a second article I wrote on the subject last year.

Being ‘hard corps’ is about trying to be a Type 1 person and not the bumbler. However, none of us is born to it and if we do not dedicate considerable attention to ‘owning our life’; falling into the Type 3 is inevitable. Then only a catastrophic event seems to move us out of our delusional stupor.

That is the context of hard corps’ second element – “to grant others the same latitude as you demand – we are all in a constant struggle with the human condition.” Much like the life experience required to sing the blues or to understand my very dark business poetry, “Are We Stupid?” it is about the nakedness of entrepreneurship. There is no place to hide, no shield that covers us from the scrutiny of life’s spectators. Our fellow warriors get it and their company brings some solace from the sniping of the sheepeople. The sheepeople don't have the guts for it, do not live it, they have never experienced the working ending end of a double barrel shotgun. If they had they would know no one is coming to the rescue, that you cannot finesse your way out of an impossible situation – this time you will pay the full price for failure.

How much have you lost? How much treasure have you given up to pursue a dream? How many relationships have you blown up in its pursuit? Bumble, Bumble, Bumble. I HAVE BEEN HERE!

I remind myself of this reality every time I see a homeless person standing on the median willing to work for food. Foreclosed with nothing left except a great business plan in need of three hots and a flop – a real virtual company.

Never loose your humanity or your compassion for the turmoil just bubbling below the everyone's surface. Being ‘hard corps’ is not only about being tough in managing yourself, it is also about retaining your humanity while surviving the life when your humanity is all you have left. Now this is tough.

Just keep saying to yourself: “Perhaps this startup is the one.”

Wacko People

The following is a reprint of an article I wrote last year base upon a book by Robert Ringer. I have been in the people business for a long time and there exist many different models for describing human behavior; Myers-Briggs (MBTI), DiSC, and the Harrison InnerView are assessments that I have used in the past. However, I love Ringer’s work because it is easy to follow and practical in its application.

Three Types of People:

Type 1: Personal Gain – direct, straight forward, WIIFM (what is it for me), believe the pie is big enough for everyone, they can win without you losing but that is your responsibility to take care of yourself

Type 2: Bait & Switch – dishonest and not sorry for taking advantage of the deceit, portrays themselves as best buddies, believe that being direct doesn’t lead to success, they can only win if you lose

Type 3: Bumblers – stumble through life and work, don’t really know what they want or how to get there, do not intentionally harm, and are sincerely sorry, as for a worldview about winning and losing – who knows?

Dealing with the Types:

1. They will insist for agreements in writing and do not trust memory, you must assert your claims, they will take what they can but not at your expense except if you allow it by wimping out
2. You must insist on everything in writing and then spend your time enforcing the deal, be especially watchful when they become nice and friendly – something bad is afoot
3. Get it in writing for later use but the key issue here is control, you must control all elements of production essential to success, if you are at their mercy – good luck.

Idiosynchcratic Protoplasm

Success as an entrepreneur requires a Type 1 mindset and behaviors; you need to be ‘hard corps’ about self-management.

It is All About You:

o Life is an Inside Out proposition – it is and always will be about you. If you are not for you, who will be?

o Grant others the same latitude as you demand – we are all in a constant struggle with the human condition

o All relationships are voluntary and based on mutual self-interest – pick well and avoid Type 2’s and 3’s if possible, the worse violation possible are people that waste your time

o Seek positive forces, relationships based on reciprocity and what can we teach each other, not what they can take from you

Life is an Inside Out proposition

You need a SENSE OF SELF THAT IS GREATER THAN YOURSELF AND YET NOT A BY PRODUCT OF SOCIAL REALITY

o Develop a core, a centrality that gives purpose, direction, and boundaries

o Test it in the world but do not make it a function of what others think – remember in the end the dirt will be shoveled in your face – not theirs

o Where is your passion, what would have you jumping out of bed @0400 or working all night

o What are your boundaries – where is the line that no one can cross starting with you, the amount of respect you receive is based upon how you treat yourself

o How will you stay on the path – the law of extremes says that great success and abject failure have the same risk; one feeds hubris and entitlement, the other breeds more failure from all types of dysfunctional behaviors reinforcing your predicament - life becomes a perfect hell because it is by your own hand.

More to come

"Are We Stupid?" or just bad business poetry

Are we stupid? Why not take the path most traveled; get a job, eat dinner at the appointed time, cut the grass on the weekend, and perhaps if good at the chores find a sexual reward once week, a forgettable 10 minute sweat.

Ok, feeling better now having answered my own question - what was I thinking? I would rather have everything bet on the turn of friendly card. I would rather be screaming at some dumbass bureaucrat (how do I know he is a dumbass? He is working there! If he had either brains or stones, he would be on my side of the table screaming at some dumbass).

I would rather have a lobotomy than be norml

I would rather sit here in the dark cold of an Atlantic winter because the power was turned off, than be average.

Got to stop wishing, got to go fishing, down to rock bottom again - thanx for the great line from the Rabbi of Key West.

And he awakes wondering if he was butterfly dreaming of being a man or a man dreaming about being a butterfly.

Sleep well, may coherence visit your dreams of market dominance.

the Invisible Hand

Nothing heats my blood more than the blind indifference I feel from society, government, and large organizations. Although there is an awakening occurring in the country as exemplified by Tom Peter's "Brand You,” Daniel Pink's "Free Agent Nation", and Mary Foley’s “Bodacious Women”, we are the most underappreciated segment of the country, and the world. I do not mean the occasional lip service from the political class - I mean by their actions.

Let me give one example that will serve as the rule - taxes. Have you scratched your head watching the debate on taxes; individual or corporate? If you had an economics class, you know people are supposed to be rationally motivated and act in their self-interest. So in the debate on who should pay and how much, you would expect the conflict to be between the rich and poor and yet that is not the case. The already rich act with indifference to tax policy, tax cuts, etc. Just think of Warren Buffets comments about the low level of federal personal taxes or property taxes in California - how can this be? It is because tax policy in the United States focuses on earnings, not wealth. The poor don't pay much if anything (the lower 50% - under $30k pay only 5% of the total tax) and wealthy do not pay on their assets, not on income derived from sheltered assets such as municipal bonds (which many times is tax free). It is the productive that support the system (the upper 10% - over $150k pay 67%), a tax on adding value! Moreover, if you follow this logic out, taxes have a consequence of adverse impact - the higher the tax, the less of that activity, less of that good produced, etc.

My intention is not to engage in a political dialog - what you believe and who you vote for is your business - my point is it's us - entrepreneurs and business owners who generate a considerable part of the countries GDP, provide the majority of jobs during expansion and job loss during recession. We were the 8.2 percent growth of the first quarter of 2004 and yet have no allies - we pay the bill for their avarice without the return. Why have we been ignored given the obvious significance of our contribution? My belief it is because we are an independent, disparate gaggle that does not join; we really do not want help from Sacramento, Albany, or Washington DC - otherwise we would have real jobs working for somebody else.

It is the same issue with large corporations. Most companies target B2B or B2C in their business plans while the entrepreneur/startup (B2E) is ignored. They think of us as the local mom & pop dry cleaners or sub shop, not people with dreams, aspirations, and the ability to grow into partners or competitors. They understand the numbers, almost 100% of us will go belly-up within 7 years, and ignore the reality we do not give up - we just start repeatedly until it sticks; one good contract or order from them would have made the difference.

Part of me wants to keep the secret - I loved the ability to take our small consulting operation against the big players - McKinsey or Anderson (Accenture) and steal the business. The truth is we are just like entrepreneur and owner. Examine a senior executive of any large and fast growing company and you will find our heart beating in their chests, our intelligence running their CPU’s. We are the heart, soul, and brains behind real growth in any economy. We suffer the brunt of the bear when the economy tanks and loose our fortunes, devastate our credit, and are forced to dodge foreclosure and bankruptcy as a result. There is no one out there with our best interests at heart.

Next time somebody talks about the invisible hand of the market - look in the mirror. It is not invisible – the hand has your face.

We will become visible because this new century is OURS!

Globization of the marketplace not only has companies competing everywhere, the same dynamic is happening to countries. Government is a very blunt instrument and is only effective when a hammer is the right tool, certainly not in circumstances that demand finesse. Globalization means governments really do not control their borders in terms of money and brains. Countries are finding that bad economic policy means flight or scarcity of capital and talent. I witnessed this first hand in Africa where the vicious cycle of bad economic decisions and the inability to entice investment capital (except World Bank loans for ill advised projects that provide little return except to the ruling class and put the country further in debt) leads to tighter currency and immigration controls. You want an example of the logical extension of government with upside down priorities - think Zimbabwe.

The Club of Terror - Part 2

(continuation from Serial Entrepreneur) I recognized these people as my brothers and sisters.” What happened in my thought process to recognize these Ghanaian’s as my spiritual family?

It was the "terror" to quote Joseph Conrad's Heart of Darkness.

Rewind the tape, its 1990 - Accra Ghana. The class was enjoying the sessions but on this third Monday, I sensed restlessness. The unofficial leader of the group, the son of a local king, asked if we could not stop and talk about things important to them. He went on to say this was not commentary on the course - we just had not covered things that kept them awake at night. He then relayed a story of his first startup where he was the principle financier. They had just secured a large deal with a multinational company brokered by the Accra office of the UNDP (my current employer). They set up the deal and negotiated with local suppliers in the immediate area. The contract was signed, money paid and spent, orders placed, and the clock started clicking. Their suppliers were providing pre-assembled materials and the young prince's firm finished the product. An excellent example of his London Business School education. 30 days passed, then 60 and still no partially finished products from their suppliers while they were trying to stave off the multinational and preserve a considerable investment. The story ends with both irony and tragedy; Unilever fired them and when the product was finally received, the supplier was incensed that it was refused and the invoice denied.

This story was followed from a petite woman who had remained silent until now. Women in Africa have a special set of problems because in most countries they cannot own property and in others are considered part of the husbands or fathers property. She was from Senegal and had started a business in her home village. It was a cooperative weaving cloth with her tribal pattern - just like the Scot's and their beloved tartans. She pooled money from her sisters, aunts, and friends, added it to her own in order to purchase old manufacturing equipment and leased space for production. She could not secure any loans because she did not "own" anything including herself. After two years, the business was providing a good living for her employee's and she was actually considered rich in the village. Her bank account was growing, she was respected in the community, and it was all lost in an afternoon. Her husband suffered from the chronic under employment endemic to this part of the world and decided it all belonged to him - legally it did. In a day two years of work was lost and yet here she was sitting in my classroom having left her husband and country behind to pursue her dreams. I cannot even guess what demons she had to face down but a year later she had just started a weaving cooperative making kinte with a micro-loan provided by a local bank (part of our course).

Our future tribal king was now involved in a state-of-the-art chicken processing business. Although the equipment was used and low tech, the business design was not. Both individuals had overcome failure and their private terror from wiped out assets and now were back better than ever. They never lost faith in themselves, never succumbed to their very real fears.

It was then I understood my feelings of family, our connection. I was weeks away from bankruptcy spending the last few dollars on getting to Africa and start this new client relationship which did not pay very well. In fact, the fees were so low that six months earlier I would have been forced to turn it down. Now I was in the middle of nowhere, accessed by half a day trip by Land Rover over unpaved roads, performing my own rope-a-dope 4,000 miles away and trying to keep it together without blatant lying. I remember the fear and my thoughts about foreclosure, no presents at Christmas for my young children, or living in the car. That was replaced with the feeling of an exhilarating narcotic of self-redemption, of being the business Houdini - I understood the root cause of OUR fear; it's being a member of the herd, of being normal, of being average, of living by someone else's leave, of not living and then dying filled with regrets.

How you handle the fear is so important. There is no one to talk to unless they are members of this club; the club of terror. It is like the Harley Davidson bumper sticker..."If I have to explain it, you won't get it.” If you take it home, it will incapacitate your spouse and destroy the relationship. Show it at work and employees will be looking for jobs, the banks will shut done your lines of credit, and customers will only pay after the delivery of products and services.

Welcome to the Club!

Serial Entrepreneur - Part 1

Like some 12 step program, I first must admit, "I'm an addict.” I do not know if it is the adrenaline rush of risking everything or the satisfaction of achieving against significant odds, but I must admit an addiction and then understand its roots. Nothing in my life (I thought) prepared me for the last 18 years. Raised in a gypsy blue-collar family, my father did have a go at his own business for 3 years, but decided he and my mother needed more certainty when it came to paychecks. He had a low threshold for BS and that made for numerous job changes and family moves - but he was not an entrepreneur.

My upbringing was haphazard in terms of where we lived and the schools attended, however my future was certain: college and a job in engineering or science. It was not even discussable, it was assumed, and the only dialog was over which college. This was cemented during my high school years in Florida living through my father's experience in the space program and watching Star Trek; the outcome was ordained. I spent the next 10 years in the sciences; as a marine scientist and my fondest memories are of rolling decks in the North Atlantic with sunrise over the glaciers on Greenland. Yet it was not my true calling, it stirred my brain but not my heart.

Fast-forward 11 years; I am working for the United Nations Economic Development Programmes in West Africa. We are training entrepreneurs (or wanna be's) the skills required for success. After the first two weeks of a three-week program on building processes to improve the odds of success - came my epiphany; my heart was finally engaged. Being an entrepreneur engaged in a startup is tough enough in the developed world like the US or Europe, but in the developing world it is a miracle. These entrepreneurs exist in conditions of no infrastructure (transportation, communication, access to money, etc.) and graft (paying bribes to government officials to do their jobs and adding up to 25% to the cost of doing business). You run a business where to a large degree success is out of your control and yet they were making it work, and sometimes on a grand scale. As they talked from both head and heart, I recognized these were my brothers and sisters. We have more in common with all of the racial, religious, and cultural differences than I did with my own wonderful sisters!

That moment I knew I was called. Entrepreneurship is like the priesthood, social work, teaching - if it is not in your heart - it cannot be explained. 18 years, 6 startups, a life of incredible highs and unfathomable lows - I love it all.