Google CEO Larry Page via YouTube
Every engineer who has invented some new technology, or is adept at creating solutions, believes that is the hard part, and it should be a short step to take that solution to market as an entrepreneur. In reality, that short business step embodies far more risk, and a poor technology solution is not near the top of most lists of common reasons for business failures.
In fact, a Duke and Harvard survey of over 500 technology companies showed that only 37% of their leaders even have engineering or computer science backgrounds. Clearly, engineers should think twice before assuming they have an advantage over the rest of us toward being an entrepreneur. Read more
Young Steve Jobs in Scientific American via Spaceageboy/Flickr
One of the toughest things about running a startup is the feeling of loneliness and isolation. You are on your own and nobody supports you because it’s hard for them to see what you see and feel the excitement that you feel at the critical stages. This is especially true if you run your startup from your garage.
The leadership position alone can cause loneliness and disconnectedness, and that sometimes results in self-defeating behaviors. If your personality already leans toward narcissism, being the boss will likely bring out the worst in you, leading to intimidation, deception, and the use of coercive power. Of course, that leads to further isolation. Read more
Somebody asked for standard boilerplate for sweat equity via the ask-me page on my website.
I am looking for a contract template which states an agreement for services in exchange for equity. I was hoping that you would have a template that you can share.
That’s not going to happen. Fundamental sweat equity is beautifully, blisteringly clear, and real. And needs no template or contract. And most other sweat equity is full of potential problems, misunderstandings, and disappointments.
Real sweat equity
Real sweat equity is solid. It doesn’t take documentation; it’s as basic as walking forward. You start your company, create something from nothing, grow it, and the sweat equity value is simple and obvious. For every company owned by its founder(s), sweat equity is a simple formula
- compensation taken
This is the way of the startup world, for the most part. Real life. Be careful, though, as you develop the business, not to underestimate real expenses and overstate profits by ignoring the fair value of the founder’s work. That messes up the analysis. Read more
Gang of Four CEOs image via FastCompany.com
Every startup, as well as mature business, needs to learn as much as possible from Amazon, Apple, Facebook, and Google, who have set the standards for fast growth and success in today’s business world. These companies, designated the “gang of four” by Eric Schmidt a couple of years ago, are clearly driving a consumer and business revolution on the Internet today.
According to many technology pundits, including Phil Simon, in his book “The Age of the Platform,” these four exemplify the rise of platforms with applications as a business model, rather than a single product or service. Whether you believe his conclusion or not, you can learn a lot from the lessons he offers on how to build a competitive business model today: Read more
Through Rob Wiltbank’s ground-breaking study in 2007, angels in groups learned that collective due diligence on new deals really pays off. The 538 angels included in this study enjoyed 2.6X returns over the life of their investments. However, for deals on which collective due diligence totally less than 20 hours, returns were only 1.1X. But, deals on which angel put in over 40 hours of due diligence (the top quartile) returned 7.1X to angel investors. Due diligence clearly makes a big difference for angel investors.
Let’s drill down a bit. Entrepreneurs pitch to angel groups and, for those deals of interest to the members, a due diligence team is formed. Angel members self-select by volunteering to join the due diligence team. OK…in some cases members are recruited to join the team, because (1) they understand the business vertical of the target company or (2) they are known within the community to be good at due diligence. Finally, one of the team “raises his or her hand” and volunteers to lead the due diligence. Well…perhaps that member’s other arm may have been twisted a bit to take on this due diligence chair position. Read more
Steve Blank has a good post today called Failure and Redemption, which he introduces with this:
We give abundant advice to founders about how to make startups succeed yet we offer few models about dealing with failure. So here’s mine.
Steve’s experience was Rocket Science Games, which raised $35 million and a cover story in Wired Magazine before failing. He writes about shock, denial, anger, blame, depression, acceptance, and, finally, insight. Read more
Warren Buffett photo via Wikipedia
Great entrepreneurs have long been the epitome of people with a great work ethic. But many complain to me that it is becoming harder and harder to find team members and employees who demonstrate and live the same culture. Somewhere along the way, work ethic seems to have been replaced by a pervasive sense of entitlement, especially in the younger generations.
Now is the time to assess your own situation, set out clearly what you expect from each and every team member, and unleash the entrepreneur inside every employee. As a guide, I enjoyed the analysis of Eric Chester, in his book “Reviving Work Ethic,” which provides a leader’s guide to ending entitlement and restoring pride in the emerging workforce. Read more