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STARTUP LESSONS FROM TODAY'S "APPLE BLOWOUT QUARTER" AND "THE CIRCULAR FIRING SQUAD OF THE REPUBLICAN PRESIDENTIAL HOPEFULS"

A few minutes ago Apple announced a "blowout quarter" of sales and revenue (Tuesday afternoon, January 24, 2011).

Twenty four hours ago the Republican presidential political hopefuls debated in Tampa.

Startups can learn a fundamental lesson from both events:
"You have to stand for something" to win.

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STAND FOR SOMETHING

Apple sells products that are exciting in their elegant simplicity. There is no confusion. The positioning in the mind of the consumer is clear. The message is short and crisp.

Each of the Republican hopefuls has yet to take a stand on what he stands for. Each of their messages is a combination of many words (attempting to appeal to the most voters without offending too many others). That's the ultimate compromise and a sure way to not win. Voters stand aside, confused, with over a third saying they are undecided hours before each voting deadline. Everyone knew what Obama stood for ("Change, Yes We Can"), he owned that wording. Perhaps the Republican victor will be able to eventually do the same kind of focused messaging. But until then, voters will continue to scratch their heads.

It has been my experience that serial entrepreneurs quickly figure out what their company should stand for (in less than four words). That is difficult, but is a mark of the grand winners.

Is there something else required for a startup to win? Yes, there sure is!

Must Have

Serial entrepreneurs tell me there are three Must-Have things your startup requires to win:

1. Products that "WOW!" your customers. Exhilarating substance, not boring fluff.
2. Execution with excellence. Doing your plan brilliantly.
   
3. Moving target that keeps competition behind.

Products that are okay, but not exciting, produce Number 2 (Chimpanzee) companies and start a slippery decent into the group of a dozen starving Monkeys. Gorilla status requires products that get the end user highly emotional, eager, compellingly driven to get their hands on those products (Riots at the Apple store in Beijing). Startups with me-too products ("better, quicker, cheaper") cannot become great winners.

Execution by your company must deliver everything on time, well done, month after month after month. If you err, you end up losing your momentum. Lululemon missed executing inventory deliveries, angered customers, and their stock was crushed. Apple has continued to deliver with brilliance, in spite of wildly unexpected demand by consumers for phones, pads and computers. Startups must do the same, under even more challenging circumstances.

Once a Gorilla of a new market, the leader must keep up the momentum with more great product inventions and continued, amazing, execution. That moving target makes competitors cry, unable to leap over and take the lead. RIM failed to do that with its Blackberry. Apple leaped over and never looked back. Android phone suppliers (Number 2, or Chimpanzee status) are running at feverish levels to just keep closely behind Apple's constantly changing leadership position.

 NOT ENOUGH

The above Four Must-Haves are required, but are not sufficient to ensure startup success. You have to have one more thing to win:

Number One is "You have to stand for something" to win.

A clear, short message about what your startup stands for is what end users are seeking. That is the foundation on which all else is built. Then your WOW! products become branded, never to be forgotten by end users. Your execution is appreciated by customers, reinforcing your growing position as The Leader of the new market. Your ever changing, constant innovation leaves your competition standing (behind) in awe of your startup. Bloggers spread your message around the globe (at no cost to you.)

That is what marketing is about in this new era. It is mandatory for startups.

Done well, you are shooting a rifle at a clear target.

Done poorly, you are shooting a shotgun in a circular firing squad.

BOTTOM LINE: Serial entrepreneurs figure out swiftly what their new enterprises should stand for. They deliver fresh products/services with quality and timeliness appreciated by customers. Further innovation surprises competitors, leaving them continually behind. That's power marketing. That's the basis for building your unfair competitive advantage. Veteran entrepreneurs do it all the time. You can do the same.

I wish you The Best on your Adventure!

STARTUP 2012: What style CEO will work best?

"What type of management style works best for a startup?" is a question I'm often asked.

Some of the veterans of new enterprise land have concluded that the best answer is "Whatever style gets the job done."

Unfortunately that's not very helpful, especially to first-time entrepreneurs who are wondering if they have "the style" it takes to be the CEO.

My research tells me that there are as many different startup CEO management styles as there are sports coaches. Both groups compete to win. Both groups are composed of CEOs with vastly different styles of getting the job done (through people, ergo by managing people).

So the first tip today is: Any style of managing opens the door to any person to be a founder CEO. You are not ineligible because you lack "the winning style" because there is no one style that wins.

What distinguishes the CEOs is the company culture they create because of the kind of person they are. CEOs dominate the values of the new enterprise. They hire people with similar values and those people do the same. The result is a collection of startups with vastly different cultures. Google is not Facebook is not Apple is not your Newco startup. In essence the new enterprise mirrors the values of the founder CEO. That means you become the designer of the culture of the startup by just managing via the style that is natural to you.

I'm currently studying the biography of Steve Jobs, picking out elements that get me thinking about management style and startups. I knew Jobs and people close to him over decades, thus the book is less news and more of a way of thinking about management styles for startups. This is one reason I recommend startup people read books to study people.

There was little innovative about management style at Apple. There is at Google. Both are very successful new enterprises. Their founders' values are the primary determinants of how their company's culture is built. And that brands each company forever.

TEST YOUR STYLE

What is your management style?

One refreshingly different way to examine your management style is to see how it measures up with love.

For a definition I use a passage from the Bible:

1 Corinthians 13:4-9

New International Reader's Version (NIRV)

 ⁴ Love is patient. Love is kind. It does not want what belongs to others. It does not brag. It is not proud. ⁵ It is not rude. It does not look out for its own interests. It does not easily become angry. It does not keep track of other people's wrongs.

 ⁶ Love is not happy with evil. But it is full of joy when the truth is spoken. ⁷ It always protects. It always trusts. It always hopes. It never gives up.

 ⁸ Love never fails.

Try asking yourself (and then a good friend) how you are the same or different when using that criteria to measure how you manage people.

Then consider what you might do to alter your managerial style to get even more results.

BOTTOM LINE: Knowing your management style reveals how your startup will build its culture. That will show you what kind of people will be repelled or attracted by your style. It will open you eyes to what you need in people around you, talent required to complete the managerial skill set required to make your new enterprise a success. Serial entrepreneurs know that. It's what they use as the foundation to build their unfair competitive advantage. So can you.

I wish you The Best on your Adventure!

STARTUPS 2012: How should a founder get prepared?

One thing is clear from the 2012 Consumer Electronics Show: millions of people are eagerly seeking to find and ride one of the next big waves. The competitors include the Giant Global Corporations as well as Startup Founders. Mobs are forming, milling about, seeking the fresh waves to surf.

My bet is the Startup Founders will spot the next set of waves before the Giants Corporations do.

Somewhere in the confusion and scrambling about smart televisions, content management, pads and phones is the seminal energy that will start the fresh waves lifting. From hundreds of miles away you can feel the CES energy radiating, pulsing around the globe.

BE PREPARED

So what should the wanna-be startup founder do right now?

Simple: as the Boy Scouts motto says "Be prepared".

Here is what serial entrepreneurs do at this early stage in the phase we are in:

• Start with a bold idea. The key word is "bold". Your initial idea is going to change rapidly. But it always has to be bold so it has enough power, reach and attraction to stand out from the intensity of what everyone else is talking about.
• Secure your Buddy. You have to have at least one more close friend to help work through all the changes your initial idea is going to go through. In the biography of Steve Jobs, that person was Steve Wozniak. Google was two friends. Solo is for pilots, not entrepreneurs.
• Pick a wave to ride. Look, think, decide. Go for it. The early waves will change as they form shape. Your job is to continue to change your initial idea so it begins to ride the forming wave. Be careful to not get ahead of the wave (it will overtake and crush the too-early surfers). Be careful to not be too hesitant (you'll be behind the half dozen front runners and find it hard to overtake them).
• Change, changed, change. You are working with head knowledge at this point in the process. It's quick to alter, even abandon the inital idea. I've watched entrepreneurs abandon one, two, three ideas on their way to the one that launched the startup. That takes guts. And smarts.
• Build your resources network. You are going to need workers and money and lawyers and related services. Contact them, even if you do not yet have a company started. You will learn a ton of great things from short meetings with them, phone/Skype chats. Talk, don't email. Get personal. Get smarter from those smart people. Every question asked of you demands an answer. Soon you will find yourself working on solutions for issues about your fast changing idea. And it cost you nothing but a bit of time.
• Start documenting your Executive Summary. One page. Everything about your idea that you know up to this point. This document is living, it will morph week after week as you make change after change. Writing forces you to make decisions, guess at unknown numbers, be confronted with problems that must be resolved. This is a discipline (based on an old Greek word that means "dis-is-no-fun").
• Plan the construction of your first product/service. On paper. With numbers. And dates. And resources required. Sketch it. Use the resulting costs to start your first cash flow requirements. Add that to your Executive Summary. Keep it simple. The engineers can later dive into the details of how to do their magic.
• Look for the "WOW!" in your idea. You have to have WOW! to stand out from the crowd. It has to be hyper-compelling to end users. This is central to your success. Without it, step aside and just watch.

That will keep you very active, focus your thinking, force you into making important decisions.

BOTTOM LINE: The next waves are forming as you read this. Your job is to prepare to ride one to the beach and win big. Serial entrepreneurs use the above process of continuous change to get their minds ready for creation of the company. This is a matter of months, not days, but time will fly and so should you. Your objective is to get ready with an idea that will attract the resources required to form the company and build an unfair competitive advantage as you ride a fresh wave that lifts you higher and higher as it grows global momentum. That's how serial entrepreneurs do it. You can do the same.

I wish you The Best on your Adventure!

STARTUPS 2012: Tips on what to expect

Here we are in 2012 with a lot facing us as we peer into the coming twelve months.

Like you, I've been pondering what is likely to happen so that I can take advantage of what I perceive and determine what to avoid.

Your primary personal goal for 2012 is to Remain Positive in Spite of Whatever Happens.

You have a lot on your mind and a lot to do today so I here are some short, swift tips to think about:

1. Basic Rollercoaster World Economy
2. Startup Investors Cautious and Very Picky
3. Mass Market Wins Most
4. Great Employees Harder to Find
5. Emotions Ride Big Waves Up and Down

• Basic Rollercoaster World Economy: Expect the unexpected from the giant economies. Consensus has forecast a year of "stagflation" (stagnation overall, with inflation in some areas such as food and energy). Europe in recession, China and India slowing down dramatically, US not accellerating, with the rest of the world hoping to avoid such troubles. National leadership is up for change in bitter elections in major countries. Thus 2012 is not the year of "The rising tide lifts all boats". It is "The Year of the Rollercoaster", a year of many ups and downs, all not easily predictable.
  
  • POINT: Your startup will have to be founded on a rising wave that is independent of the world economy. End users will have to get very excited about it, regardless of their economic situation. Your product/service has to have lots of Wow! to succeed in 2012.

• Startup Investors Cautious and Very Picky: The lack of enough liquidity events has tied up the check books of the angels and venture capitalists. It is not a drought, but many of the people with money are not confident they have enough cash to eagerly pump more into struggling startup after struggling startup. Startup investors reflect the same attitudes of other investors around the world who are upset by poor 2011 returns on investments and now are struggling to do better.
  
  • POINT: You will have to have a lot of WOW! in your presentation to get investors to open their cash vaults. Spend time to pick those who have a lot of fresh cash looking for fresh ideas. Beware of those who have limited cash remaining for their existing portfolio companies. Raising startup money in 2012 will be a long, hard slog for most founders.

• Mass Market Wins Most: Any technology, any idea must appeal to huge world markets during 2012. Life or information science, service or software or hardware, all are now caught up in the vast turmoil of the world market. Did you know the hottest markets for startups are in Africa? Their economies are growing twice as fast as China and India. Industrial simply means being on the food chain that ends up with a consumer. Investors and potential startup employees know that. So must you.
  • POINT: Your startup has to appeal to huge potential audiences. 2012 is not the year for a cautious niche enterprise. It is a year for bold ideas that exploit existing markets and technologies. Expect to see many "mashups" that mix such elements into exciting products/services that get a lot of people excited. I bet we see several Wright brothers emerge with amazing gadgets/businesses built with stuff that already exists and which make headlines in a hundred languages.

• Great Employees Harder to Find: Hot startup zones (e.g. Silicon Valley) already have funded startups at war with each other as they try to recruit the great engineers, marketing people and startup experienced leaders. The uncertain world economic outlook has great people cautious about leaving a blue chip job to join a risky startup. This will continue during 2012. Great people eager to join startups are going to be tough to recruit.
  
  • POINT: Your recruiting skills will be tested as in no other year. Investors want confidence you can find and hire and retain the best people. The best people want the same from you. It is up to you to achieve that. You have to have the skills to do so. Related experience that has lead to recruiting success in the near past will make you stand out. A clear plan of how you will recruit needs careful thinking.
• Emotions Ride Big Waves Up and Down: All of the above add up to an unusually violent range of emotions that leaders will experience during 2012. The highs will be very high and the lows very low, none predictable. When they come (and they will), you'll have to respond quickly and not destruct. You will not avoid such emotions. Even Steve Jobs often nearly barfed before his famous stage presentations. Serial entrepreneurs know such emotional power is real and provokes intense fear and related stress. I've been there. And I've seen the best go there. It happens and it will in 2012. You are not immune. And remember that you are in as much danger when you hit the highs as you are when you hit the lows.
  
  • POINT: You can get prepared to manage better the big waves of personal emotions during 2012. Start with recognition that "it is lonely at the top". Then find at least one person you can speak to in confidence when the emotions hit. Better yet, find several people. Support groups are needed when you get surprised and frightened and have to make The Big Decision. Find spiritual and physical resources. Good psychological and religious well being help people weather intense personal storms. Good health keeps immune systems strong, they are your first defense against illnesses that sap your strength and lead to more emotional dark days and nights.

BOTTOM LINE: You can remain positive in an unusually demanding year like 2012. Anticipation of what is likely to happen helps. Pundants are not God, they are just looking forward as best as they can. Anything can happen. Respecting the hard work of the forward thinkers helps you see what to anticipate and to avoid. You can do things different this year and that will help you attract the money and people talent you need to win big in mass world markets. It is your job to plan how to do that and then convince people you are the leader that knows the way to success and are the one who can convince others to follow you. When you can do that, you are laying the foundation for building the unfair competitive advantage of your new enterprise. Others have preceeded you. Now just go do it!

I wish you The Best on your Adventure in 2012!