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.
At least it was clear and present failure. Very visible failure with the big raise, big press, and then the big crash at the end.
Not one of those much-more-common long drawn-out failures that end up taking years of slow quicksand-like decline. Lots of smaller raises, pivots, restructuring, clinging to hope, and frustration. With no real path to success but no exit either.
Not having the option of continuing can be a blessing. Take the write-off, swallow hard, and do something else. Persistence and perseverance can be overrated.
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
Image via Facebook
Go-to people get things done. As an entrepreneur, you need these people, and you need to be one, if you expect your startup to be successful. That may be easier said than done, since resumes do not tell the story, and without real nurturing, the best people won’t stay around long.
To highlight how rare this breed is, Jeffrey Gandz of the Richard Ivey School of Business relates a quote from a new CEO in a large company, “I have more than 1000 people in my head office organization, 900 can tell me something’s gone wrong, 90 can tell me what’s gone wrong, 9 can tell me why it went wrong, and one can actually fix it!” Read more
Image via Stock.xcng
For most new high-tech products, the first customers are always “early adopters.” The conventional wisdom is that early adopters are the ideal target for new products, to get business rolling. I see two pitfalls with any concerted focus on early adopters; first, the size of this group may not be as large as you think, and secondly, their feedback may lead you directly away from your real target market of mainstream customers.
The term “early adopters” relates to the people who are eager to try almost any new technology products, and originates from Everett M. Rogers’ Diffusion of Innovations book. Early adopters are usually no more than 10%-15% of the ultimate market potential, and marketing to them may be necessary, but not sufficient in marketing to the mainstream. Witness the market struggle for 3DTV acceptance over the past couple of years. Read more
I suspect this is one of those provocative posts that gets misquoted, misaligned and misunderstood, and definitely not to be taken at face value. Still, read Avoiding Undue Diligence: My Strange Approach To Angel Investing, in which Dharmesh Shah argues against due diligence in angel investment.
I don’t subscribe to the idea in the title. And I’m familiar with Robert Wiltbank’s exhaustive research on angel investment — as in this summary in TechCrunch — that shows a serious correlation between more hours of due diligence and higher incidence of successful exists.
Still, Dharmesh’ refreshingly contrarian, and unabashedly honest, analysis is worth a good read. And the comments are lively too.
Furthermore, I’m really intrigued with this quote near the bottom:
There’s no such thing as too many companies starting up. But, there is such a thing as not enough companies shutting down.
Now there’s a thought worth following up.