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This is a lesson I learned a long time ago, forgot about it and it came back to hit me in the head. Whenever you are thinking about doing something complicated like starting a company, once you know what you want to do, the first thing you need to do is to find people who would help you do it.
So a couple of questions to ask are: What kind of people do I need? where can I find these people? how can I convince them to join me? And then the most important question is Why should people help me?
This is not to say that you shouldn’t already start pushing your initiative forward, but it is to say that you should be looking for your team members starting on day 1.
You always need people to help you, more so, you need a team. The value of a dedicated founding team is that the team cares about the company because their future is intertwined with that of the company’s future. So first thing you want to do is to build a team. Here’s a nice tool to help you get started http://www.cofounderslab.com/ , but you should relentlessly netwrok and clearly state to everyone you meet what you are looking for (e.g.- “I am working on an internet startup and I am looking for a technical co-founder”.). The more specific you are, the easier you make it for people to help you (e.g.- elaborate on what kind of a technical co-founder: should they be young or old, should they have certain interests and passions, should they be an expert in a specific code, should they have a certain experience, etc’)
Good Luck!
This is an issue faced by many first time entrepreneurs. Namely, the challenge of brining your idea to fruition, while avoiding it being stollen by someone else. Indeed, starting up a business even without this challenge is almost impossible and so by definition, adding ‘keeping your idea secret’ to this challenge, makes it absolutely impossible.
Why are entrepreneurs afraid that someone will steal their ingenious idea? Well, this is because in their mind they are sure that their idea is worth at least $100 billion. Therefore, they conclude that anyone hearing about their idea will immediately steal it and go off to start their own business with the entrepreneur’s ingenious idea.
To solve this problem I challenge anyone who thinks their idea is worth $1 billion (or whatever they think) to try and sell it for $1000, or even $100. I will guarantee that no one in their right mind will pay anything for an idea. Why?
The reason is really that ideas are “dime a dozen”. While you may think that your idea is the best thing that a human being had ever been able to conceive, this is probably not true. Moreover, even if it was true, it is far from being enough to create any value for anyone. Value comes from talented people taking that idea and working very hard day and night to make it work. Chances are that, if they succeed, by the time they make it happen, the idea is completely different than what it was when it was just conceived.
A good example is the light bulb. Thomas Edison conceived of the idea for a lightbulb and he also knew (more or less) how to do it. Still it took him over 10,000 tries (legend has it), before he had a lightbulb that worked. At that point he still did not have something truly valuable because to make it work he had to build a grid and serious infrastructure. Edison’s brilliance was not only with the invention, but also in his vision and ability to portray that vision to the people who eventually went ahead and built that infrastructure (including factories to produce light bulbs, electricity grids, etc’). It took super-human determination, perseverance and linchpin (someone who makes things happen) qualities. Same goes for visionaries like Alexander Graham Bell, Henry Ford and more recently Steve Jobs among many other great entrepreneurs. So good ideas are good but they are far from enough to be worth anything. Edison captured this best when he said “genius is 1% inspiration and 99% perspiration.”
On the other side, some really bad ideas turned out to be great businesses. One of the most famous examples is Twitter. Many brilliant business people thought it was “the worst idea they ever heard”. Essentially, the idea was to take the status updates application from Facebook and make that a separate social network (most people responded as follows: “what? so all you could do is post a status update? and you want to limit it to 140 characters? but it already exists in Facebook? and why would people even want to do that, what would they post? and even if they do, why would other people care? this will never work!” Arguably, these people had a good point. In hindsight we know that it turned out to be a great business.
To sum it up real simple: A real entrepreneur has ideas dripping down of him constantly. Most of them are bad, some of them are good, and very few might even be brilliant. What makes an idea into business is not how good the idea is, rather it is how good the team is in coming up with a plan and executing that plan. Finally, I believe that you shouldn’t be afraid to share your idea with others. If you don’t, they can’t help you.
So go out and share your ideas. You might find other people with similar ideas, or with insights to make your ideas even better. And you might just find the kind of people who would help you fulfill your dream (not necessarily the way you thought about it).
Let me know what you think.
Recently I had several conversations with different people about the concept of a business model and several common questions were raised: what is a business model? why do I need a business model? and how can I demonstrate it or prove it?
These are all good questions and I have noticed that there is a lot of confusion surrounding this topic. So here is my take on this simple but very crucial part of any business.
Essentially, a business model is the way you intend to turn your proposed solution into a cash machine. Specifically, when you have a business idea, usually you come up with a solution to a market pain or a common problem. After you figured out your brilliant solution, your next challenge is to figure out how to ask people to pay for your solution. And even more specifically, you need to find a way to make people pay more than it costs you to supply or provide them with your solution. Once you figured that out, you have a business!
Next, obviously you need a business model because without it you don’t stand a chance of surviving. In the business world it goes no cash = no life.
Finally, the simplest (and probably best) way to demonstrate your business model to potential investors (but also to yourself) is to show very simply that there is a significant difference between whatever it costs you to acquire a customer (or CAC) and what an average customer is willing to pay you (or LTV for Lifetime Value of your customer). In a simple formula it would look like something like that: IF Customer Acquisition Costs are LESS THAN Revenues Per Customer, THEN you have a business. The greater that difference is, the better. Note that often you will have to factor overhead costs to that formula. Click on the image below for a great blog post on this issue.
Click on image for a great post with more detail about this issue
This week I attended a prescreening meeting for entrepreneurs, who are looking to raise funds for their companies in front of a forum of angel investors called VANTEC (This is a pleasure that I have been privy to for about 6 months now and had seen over 30 presentations thus far. At this point I can say that I have a good sense for what Angel Investors are looking for). In that meeting the panel of judges was really dismayed at the unprofessional level of the presentations. More so, they complained that (at least) some of the companies seemed to be attractive investment opportunities. But their presentations made them look really bad and would turn investors off, they thought. One of the companies, which seemed like a great investment opportunity (on paper), but completely missed the ball in their presentation caused a great deal of distress for the panelist, who did not want to miss the opportunity. So I volunteered to coach them and thought it might be a good idea to share some of the important points to keep in mind when pitching to Angels.
1. Be prepared! nothing turns investors off more than a flaky looking presentation. It sends a message of incompetence: “How do you expect to run a company and make 10 times the money for us if you can’t even prepare a decent presentation”. This means rehearse and make sure you stay within the allotted time.
2. Keep it short and simple (KISS): Investors watch presentations often for hours. During that time they have to remain concentrated and sharp. After all we are talking about a lot of money. They would really appreciate it if you make it easy on them. Avoid getting too creative and always use the simplicity test: if you can make it simpler, do!
3. Have a story line in your presentation. Meaning your pitch should have a logical sequence to it – a beginning, a body and an end. Each slide should naturally lead to the next.
4. You should cover these questions in your presentation: What is the Problem / market pain? Your solution / product / service? Business model (or how you make money with your solution)? Market Potential (how much is the market worth)? What do you need (what is the deal that you are offering the angels)? Who (your team)? Often, it will be a good idea to mention the competition and your competitive advantage (usually a patented technology or ‘secret sauce’). It’s a good idea to have a 5 year sales and income projection table. As well as to mention some major milestones that you overcame and some that you still need to tackle.
5. The most important part of your presentation is your team. Contrary to what most entrepreneurs think, investors invest in people, not in ideas! Your team needs to demonstrate that they are the best people to get the job done.
6. Avoid these pitfalls: Don’t discuss anything that you can’t explain in a couple of sentences. Instead describe the result and tell the investors that you can achieve it (they don’t care about the technical issues). Don’t exaggerate your numbers. You are not likely to make billions of dollars, and they won’t buy it. Don’t be cocky, but don’t be a sissy either – Be yourself and be confident – represent your company! Avoid jumping around from one issue to the next – stay on topic. 
Avoid doing product demonstrations. If there is more the 2 panelist (actually, unless you are in a coffee shop) , you should stand up – it looks better and commends more confidence. Don’t fire back at criticism, instead write it down and thank them for their feedback.
Finally, remember that your objective in the pitch is not to get money. Rather it is to get a ‘second date’. More specifically, your goal is to give the investors enough information to get them to ask you questions. If they don’t ask any questions in the end of your presentation, chances are that they are not interested.
I hope that helps. feel free to drop a comment below and make more suggestions.
I am helping an early stage internet startup to get first round financing to grow the business and hopefully explode in the world wide web. The first thing I did was to get the founder Ruthy, a smart business women with a contagious personality, to pitch in front of an angel investors forum. I got her a spot in a very short notice and helped her build a good 90 seconds pitch. Then I also coached her on the delivery. Needless to say she worked very hard all weekend long to be ready for Tuesday morning – and she was.
When we got in early in the morning the first thing I did was to look at the list of presenters. That day must have been the longest list I have ever seen in that forum, but her name was nowhere to be found. I realized that something was wrong. After confirming with the organizer that she was not going to present that morning, I was struggling with how to break the news to her and why was she not registered. It turned out that while she registered for the website, she didn’t complete her registration to present in that event. This was a bad situation.
I decided to just tell her the situation as it is and try to make the best of it. She was obviously disappointed especially after all the work she had done in building and rehearsing her pitch. But I reaffirmed her that she will get value from this experience.
Because she was not presenting, she was allowed to seat in on the other presentations, which turned out to be invaluable for two reasons: 1. after seeing “her competition” for the angels’ money, she became a lot more confident in her company (this is not to say that other companies were no good, many of them were really good, but so was her company). 2. she learned what it takes to have a good presentation.
By the end of a morning full of presentations, Ruthy had gained a lot of confidence and wisdom. After the presentations were over I introduced her to a few angels. Talking with the various angels, she essentially used the pitch that we had developed for her and she received positive, even enthusiastic response from them.
This was just the first step in a longer process to get capital from investors, but as they say “a journey of a thousand miles begins but with a single step”, we probably made (more like) 100 steps. The purpose was to prospect for an angel sponsor and we got some pretty good prospects. Success!
The lesson here was pretty clear to me: When things go wrong, it’s possible to make them better than initially anticipated – find the way.
Hi there, my name is… you guessed it- Neil, and I am a scholar of entrepreneurship. Sometimes, I like to describe myself as Entrepreneurship Instigator. You see, I believe that we are all born entrepreneurs and that entrepreneurship is a very important life skill. My hope is that in sharing the lessons of my ongoing study of the subject, I will be able to offer some value to readers like you and learn something in the process.
To clarify my starting point, I want to suggest the following 2 questions:
1. What is Entrepreneurship and who would be considered an entrepreneur? and
2. Why is it important?
There are many definitions for the term entrepreneurship. Most commonly, it is referred to as the act of undertaking a new business venture, that it involves risk and innovation and management and leadership and a lot of other staff. However, I would like to offer my take on entrepreneurship as a skill. Namely, that it is a skill that you can develop and master and it involves: identifying problems, finding solutions, systemizing the solutions and spreading them in and across communities. This definition allows for anyone to be an entrepreneur whether you are starting up a company, or you are spearheading a new sustainability program at your office, or even if you are a single mom who is starting a local club that helps other single moms handle the challenge of caring for their families on their own. It is worth pointing out that the adoption of your solution by others is key to this definition.
Next, Entrepreneurship is an important skill to have because at its core it’s about solving problems and helping others with their problems. nuff said! (more on this in a subsequent post).
So, what I hope to do is first, to convince you that entrepreneurship is a worthwhile skill to acquire. And second, to provide you with information, ideas, tips and resources on how to actually go about it.
Much of my discussion will be devoted to starting up a business and the challenges that face the business entrepreneur. As well, because I am located in Vancouver, BC, the majority of my examples and resources will probably be from that region. I invite you to share information and examples outside of the business world and from different regions in the world.
On that note, I hope that you will enjoy the content that I offer and receive value from this blog. Let’s get started…
Neil Goodwill 