Nesheim Online

STARTUP TALENT SHORTAGE: Number 1 reason startups fail to execute their business plans well

"What should I most focus my efforts on when executing the plan for my startup? is a great question, one I frequently receive.

Its importance jumped out at me this morning when I read the following note from Mercy Ships, a Christian sponsored non-profit organization that brings free medical services to the poor around the world, notable from ships docking along the coasts of Africa.

As a non-profit organization Mercy Ships is constantly seeking talented seafarers to meet the demand for qualified crew in our ship. Our recruiters attend job fairs and recruitment venues looking for Deck and Engineer Officers, Able Sea-farers and Ratings, but the reality is there is a worldwide shortage of qualified ships workers, and shipping companies who can pay big salaries are also looking for them as well.

In the article entitled The Next Agenda: The War to Develop Talent, Jeff Schwartz offers a description of the current shortage of qualified workers (talent) in the business world. He says: “The concern is not about the availability of workers; it is, rather, about the shortage of critical skills, experiences and specialized capabilities of leaders, managers, creators and producers required in changing industries.” For Schwartz the real issue is not a lack of workers, but a lack of workers with the necessary skills to succeed in a changing market place.

So you are not alone! Unfortunately.

The point for founders of startups is simple: Line up, recruit, entice your best people before you begin your startup. They will form your Core Team. They will do the bulk of the recruiting, so be sure they are able and experienced at finding, attracting and retaining the finest talent. You will need every sharp brain you can find if you are to deliver on your business plan.

You will be competing intensely with vast numbers of hiring organizations. We live in a global economy. Recruiting startup talent now routinely crosses borders to find talented people with passports, mobile phones, laptops, each confortable flying to whatever job sounds interesting. We live in the era of the most mobile labor force in history, even for startups.

Knowing how to find and keep the top, the best, people is a skill set eagerly sought in founders of startups financed by the best venture capital firms. They see you and your core team as a recruiting machine, able to at least double the number of great people each year added to your new enterprise, year after year. So if you are not yet at that level, start working on it. Get social, get in contact, get going, right now. Investors will pound on you about your recruiting abilities during your presentations.

Assemble a group of people to support your recruiting efforts. Find recruiters, contact them, get them thinking about your startup even before you have begun. Locate contract human resources experts who work with startups during the earliest stages. Add angels who have been there before, who know how challenging your first two years will be when you are seeking to add critical skilled talent to your startup. And start talking to other startup people, especially other founder CEOs. Listen to their stories and learn how to recruit to win.

BOTTOM LINE: People are what you need to build your startup. Top skills, great talent. So you have to build an organization of amazing people who can recruit and win against the world's most intense competition for talented people. When you respect the importance of this mandate, you'll add a key element to building your unfair advantage.

I wish you The Best on your Adventure!

STARTUP STALLED BUT GETS $41 MILLION: Learn from Foursquare's situation

When a startup becomes the news of the day in the popular press, you know something that stands out is going on.

It it good news or bad news for the CEO?

SITUATION

"Can Foursquare Check-In to Adulthood?"

"Foursquare Gets $41 Million Investment, Time to Grow"

Those are headlines from Bloomberg Business Week.

"Foursquare Finding Its Way" from the Wall Street Journal.

"Foursquare's Newe $41M Round Helps It Delay Tricky Questions About Its Valuation" chimes in Techcrunch.

THE STARTUP

Here is a 120 person startup, launched in 2009, nearly four years old, with $71 million of capital (4 rounds, including the recent $41 million round), who is recording just $2 million of revenue from ads.

Launched with rave reviews for its location based "check-in" feature, the novelty has worn off.

Now the company is pivoting, morphing, changing, to move into a business model that pushes its search feature which had been minimized to date. With only 10 people selling ads, founder Dennis Crowley plans on hiring many more with the new funding (Groupon has thousands.).

LESSONS FOR STARTUP FOUNDER CEOS

1. Tell your own story. Or your competition will tell it for you. Foursquare was pro-active, did a lot to diminish the negative rumors flying about.
2. Spin your story to the positive. Why? "To buy time to settle the valuation." That sounds more glass half full than "Startup survives, barely." or some other awful blogger's spin.
3. Listen to wise advice. The $41 million round was a sophisticated package, engineered to give the startup time to prove it can significantly boost revenue. Founders are wise to listen and not object when experienced board members (typically VCs) make bold business and financing suggestions.
4. Plan the details of the change before announcing it. Reporters are skilled at digging and will find out if you are winging it. Much more credible to a doubting blogger is your response to sharply penetrating questions about how the new business model is going to operate.
5. Bold is best. Tweaks of business models do not get attention.
6. Free PR generates priceless Buzz. Dennis sat in the hot seat, responded to interviews and generated huge attention (free broadcasting) on Foursquare. That makes life a lot easier for the new Sales Department personnel to sell ads.
7. Act sooner. Hanging on, hoping things will get better is dangerous. In the case of Foursquare, the bloom is now off the rose, the glory is now gone. The quest has begun. It's a slog from here on. Street-smart serial entrepreneurs run scared and make bold changes quicker than first-timers.

I certainly wish Foursquare people my very best. It's a story that could become an amazing success. So far there is no Gorilla in the location based business. The opportunity to be "first-to-get-it-right" still exists. But there is a huge Gorilla in search -- Google. That adds new risk to the new business model (search via Foursquare). Time will tell how it all turns out for Foursquare. Might be a great acquisition. Or might get a formula right that kicks ads into high gear that powers the company to IPO.

All this is about "Execution", that prized skill in startup leaders so sought after by world-class venture capitalists. It is central to why VCs say yes or no to financing your next round.

BOTTOM LINE: When your startup stalls, its revenue is mediocre, time has come to change its business model. That calls for courage and wisdom. Founders that know how to get advice, be creative and act boldly will emulate the skills of serial entrepreneurs who know how to execute a plan for a startup. When you can do that, the money people and talented employees will be pounding on your door, surrounding your car before you leave the parking lot. It is a very powerful part of building an unfair advantage.

I wish you The Best on your Adventure!

DISECTION OF A NOT-SO SECRET START-UP: Stanford success or folly?

Stealth start-up Clinkle got good press recently.

The reporter focused on the unusually deep Stanford roots of the new enterprise. While that is interesting, I found a lot more.

In this blog, I have focused on what can be useful to people like you who are keen to learn what happens in real start-ups, especially those whose founding core team is heavily composed of students.

So let's take the story apart and see what it reveals:

• Leader's family's immigrant history typical. Lucas Duplan, "son of Croatian parents" fits the pattern seen often before in Silicon Valley start-ups: Immigrants and their children have unusually high drive and desire to excel. One VC's survey revealed 62 percent of their portfolio's founder CEOs were immigrants ("green cards"). Good news: This is one aspect of an unfair advantage that others cannot easily duplicate.
• Leader thinks big and bold. Lucas has the mindset sought after by VCs. He starts with a big idea. He is bold in forming his plan and raising seed financing. That's outstanding good news to the ears of winning venture capitalists. Bad news: Lucas could be dreaming about more than he can handle.
• Idea from personal frustration and emotions. Lucas was bothered that he could not use his smartphone like money. Personal needs often trigger the spark that grows into a hot start-up idea. Smartbook began as a college lark. Cisco grow out of frustrations of Stanford University people trying to cope with data storms on campus IT networks between a quagmire of different computers, operating systems and interspersed networks.
• Market category clear. It is the e-wallet market segment, already named, already emerging. Good news: It is clear. Bad news: It is already there, no opportunity for Clinkle to create and name it.
• Crowded market. Though new, the e-wallet market is already filled with different companies seeking the magic thing that gets millions of consumers going wild about using their smartphones to purchase things. Good news: A lot of people anticipate this could be a huge market. Bad news: Lots of competitors with a head start.
• Chance to be "First-to-get-it-right". So far, in the U.S. there is no Gorilla dominating the new market segment. Many are trying, small and large. Africa is the most advanced in the world at using phones to pay for things, but so far none of those competitors is headed for the U.S. That leaves the door open for Clinkle to be first to get it right. Good news: No danger of being "first mover" and thus getting pioneering arrows in Clinkle's back.
• Secret sauce. Clinkle has something hidden that is central to the specialness of their offering. While buried so far, we do know "Clinkle aims to let people pay at retailers using a smartphone without stores needing a major tech upgrade." So we'll have to wait to see what the secret is all about. I am willing to bet this will launch as a flanking strategy, into uncontested territory where Clinkle could quickly establish itself as the leader. Good news: Some very smart, IT savvy Stanford faculty liked the secret sauce enough to invest in the seed round. Bad news: Could be a dud, an idea that does not attract the millions needed for this kind of consumer enterprise to succeed. A great deal hinges in this secret whatever-it-is.
• Execution risk is high. "Execution of a start-up's business plan is everything" is a truism ingrained in the venture world. Doing well what you think you have to do is very demanding for start-ups. This new enterprise is run by students and recent graduates. It has nearly zero experienced managers and IT professionals. Good news: Youth that does not know better can do amazingly creative things, quickly. Bad news: Mistakes in execution, in a crowded market can lead to fatality.
• High early burn rate. With about 30 employees, Clinkle is burning a lot of cash already. The company has announced it will double the number shortly and move to new quarters in San Francisco. Veteran venture investors are reluctant about feeding fledgling start-ups with too much early cash, it is too often wasted. Good news: Bold thinking with confidence is evident. Bad news: Sounds like it could be either an amazing success or an amazing high profile dud.
• 2 years old. Sounds like progress has been made. Certainly in fund raising (read the article for who invested). And hopefully in building a working prototype and gaining a sharp focus on marketing the new product. Good news: Progress in several aspects builds momentum and grows reputations as successful. Bad news: No signals yet about first launch date.
• Rolling thunder launch. Plans are to start selling via college students ("like Facebook"). There are merits in that, one being that peer group is already hooked on using smartphones for as much as possible. The bad news: As an infrastructure play, starting tiny can simply open the door to giants eager to cover the U.S. with some sort of copy of Clinkle. Clinkle's business success depends on some sort of widespread network and related infrastructure coming together at the right places in the right time. That is daunting to any new enterprise. The secret sauce is probably about a solution to that issue. Good news: This issue is a big barrier to competitors. Bad news: There are a lot of un-controllables that have to happen, well, for Clikle's success.
• Enthusiastic culture. From photos and words, it is clear that Clinkle's company culture is full of energy and is very enthusiastic. This may be one of the central elements of the company's unfair advantage. Employees (with stock options) like that can do amazing, very creative things. Clinkle can just look out the window to see the giants who rode to success on their special company culture. That is only good news and is very valuable, too often overlooked by first-time entrepreneurs.
• Buzz has begun. Good news: The press is picking up "the story" about Clinkle. Bad news: The stealth start-up is no longer in a very stealth mode, perhaps talking publicly prematurely.

BOTTOM LINE: This exciting start-up has a lot going for it, the envy of many other new enterprises. It's success is not yet assured. But it is an excellent case study for you. Review the elements and issues noted above, then apply them to your own business plan. That can boost your chances of success as you craft your unfair advantage.

I wish you The Best on your Adventure!

 

 

HOW DO START-UPS MEASURE A MARKET THAT DOES NOT YET EXIST? Tips that work for serial entreprneurs

"How do I measure the size of the market my start-up will be competing in?

I received that question yesterday from a first-timer. It's an important question.

Here are responsive tips from serial entrepreneurs (who do it with little effort).

EXAMPLE

Let's assume you are going to sell an app to consumers. Specifically, it would help people monitor calories eaten daily by scanning the dish of food they eat, using their smartphone. The company business model (how it makes money) is 90 percent sales, plus 10 percent from advertising.

The numbers you will be generating will be Units and Price per Unit. The mulitiplicant is the economic size of your market.

• Top down: TAM = Total Available Market
  
  1. How many end users have an over-weight problem?
  2. How many have an under-weight problem?
  3. For (1.) and (2.) how many are
     1. In the U.S.
     2. Europe
     3. S. America
     4. China
     5. India
     6. Rest of World
  4. What portion of them own a smartphone?
  5. What portion are
     1. Obese
     2. Over weight by 30 pounds or more
     3. Think of themselves as "over-weight"
     4. Have serious (doctor treated) health problems related to excess weight
  6. What portion are
     1. Seriously under-weight
     2. Chronically under-weight
     3. Psychologically under-weight
  7. The total of the above equals TAM
     1. Units
     2. Price per Unit
     3. Dollars
• Focus: Ideal Customer = SAM = Served Available Market
  
  1. Which segments of TAM is your product most appealing to (pick 6)?
     1. Which segment is most eager to use your product?
     2. What 2 related segments are next as measured by product appeal?
  2. In what year will you offer products for each of those 3 market segments?
  3. Line up these 3 segments like Bowling Pins
  4. The total of the above equals SAM
  •  
    1. Units
    2. Price per Unit
    3. Dollars
    4. Calculate % of TAM
       
       
• Sales: Customer Adoption = SOM = Share of Market
  1. For each of the 3 Bowling Pins:
     1. At what rate (% of each of the 3 market segments in SAM) will customers purchase your product, each year, for five years.
        1. Units
        2. Price per Unit
        3. Dollars
     2. Add the 3 sets of numbers to get your Sales.
        1. Total Units
        2. Total Dollars
        3. Average Selling Price
        4. % of SAM

• Boundaries:
  • SAM in early years should be less than 25% of TAM, rarely over 50%.
  • SAM below 10% is too small, or TAM is too large, not focused enough, lacks meaning.
  • SOM over 30% of SAM is rare. Gorillas of new markets settle in around 30%
    • SOM below 10% is too small.
    • Your adoption rare may be too conservative.
    • Or your product is rather boring, not appealing.

Once you start to follow this example for your start-up, you'll get a feel for how it is done. Avoid looking for other people to measure the market for you. Serial entrepreneurs never do. Instead, they focus on exactly what they are offering to their Ideal Customer, find them in various related markets, and figure out a plan for selling to them, including modifying the first product to appeal to each market segment.

BOTTOM LINE: You can forecast something from nothing. New markets just forming in people's heads is where great start-ups begin. Facebook before Facebook. Google before Google. Even more modest new enterprises think the same way. First-timers can learn it. MBAs can learn it. Giant corporation people can learn it. So can you! Do it and add it to the elements you are using to build your unfair advantage.

I wish you The Best on your Adventure!

DISECTION OF A SUCCESSFUL START-UP: A 17 year old’s adventure from idea to success.

Headline: WSJ LINK “At 17, App Builder Rockets To Riches From Yahoo Deal”

Nick D’Aloisio sold Yahoo his technology and company Summly for “undisclosed millions” as reported by the Wall Street Journal on March 25, 2013. Some say $30 million.

It is a special story of a kid with an idea that turns into riches. In it are classical “How To” lessons for you and your start-up ambitions. Here we go:

• Serial entrepreneur. Nick “previously created several apps, including Facemood, . . . and a service that helps people discover new music.” Start-up experience is valuable, for founding a successful start-up it is priceless.
• No pedigree. Nick was not born into greatness. No famous or super-rich parents. No entrepreneurial family-trail. No fabulous university degree. No Silicon Valley location. Just an idea and determination to make it succeed.
• Talented founder. Clearly Nick is the center of attention, for good reasons, primarily for his invention and also his entrepreneurial savvy. The founding CEO of a start-up is what investors focus on. Venture investing is a people business.
• Tiny burn rate. Nick lives at home, works at home. It does not take huge financing to do a great start-up.
• Bold seed funding. SRI International, the revered Silicon Valley R&D firm got involved with Nick’s technology (related to artificial intelligence) and has some ownership. More high profile investors got involved. Zynga’s CEO Mark Pincus, Horizon Ventures (the investment firm owned by Li Ka-shing of Hong Kong). Then came actor Ashton Kutcher, Stephen Fry, and Wendi Murdoch “who collectively gave him a total of $1.5 million in funding.” Start with high quality investors to lead you to more of the same.
• Clear use of funds. The $1.5 million came after he his initial app began getting attention. The fresh funds were for getting code written and patents applied for. Very simple, very clear, very focused. Not overly ambitious plans.
• Focus. Nick put his further education on hold, without abandoning plans for a future university education (perhaps he could buy one as his next move?). Serial entrepreneurs realize doing a start-up is best without significant distractions.
• Fresh category. The new market Nick focused on is “news-reading technology.” That is a new name for a new space, a new market. It is a unique name. People are following it as it develops meaning and commercial endeavors. Selecting (or inventing) new category increases chances of big success.
• No Gorilla. The new market is not yet dominated by a strong market leader. It has no Gorilla yet. Summly had a clear playing field ahead of it. Serial entrepreneurs know it is not wise to attack a market leader. Instead it's best to flank into uncontested territory where there is a good chance to become the Gorilla of the new market category.
• User savvy. Nick’s app attracted users, quickly. Knowing what triggers positive responses from your Ideal End User is critical to success.  That is one reason youth often “gets it right” with youthful technorati (like kids hooked on mobile phones). Nick clearly got it right.
• Strategic partners. In addition to SRI, Nick connected with News Corp. “which signed a deal . . . so that its content could easily be integrated with the [Summly] app.” Wendi Murdoch, an investor, is wife of Rupert Murdoch, the CEO and Chairman of News Corp.. One move leverages another, adding power to the market positioning as leader of the new category.
• First-to-get-it-right. Not "first market mover."  First is death for start-ups. Pioneers get arrows in their backs. Nick had many predecessors trying to get news reading summary products. All were trying to figure out how to attract large numbers of end users. Nick followed them and became "First-to-get-it-right.” Serial entrepreneurs know first is to be avoided, and that first to figure out what sensationalizes end users becomes the big winner.
• Morphed and renamed. First name was Trimit, launched in 2011 as a service for summarizing news. In late 2012 it was re-launched as Summly, reflecting the morphed focus of the refined app. Start, modify, change, shift, alter, focus, launch. So don’t sweat the first name of your start-up, you will change it.
• Clever name. Choice of the new name for the app reflected elements of brand marketing with names, a move that boosts competitive power: (1) alliteration (sum-lee, as in goo-gill, face-book) and, (2) suggestive, bringing meaning and value to users of the product. Clever names add significant value to a new enterprise, especially its branding potential.
• Buzz boomed. Nick “became a minor tech celebrity, and his efforts garnered numerous print-media articles and TV appearances.” Nothing beats a start-up worth writing about, blogging about, Tweeting about. In fact, Nick says Horizon Ventures “contacted me out of the blue” after Trimit began to receive accolades. PR tsunamis are the dream of marketing-minded entrepreneurs, exactly what they spend creative juices to make happen.
• Buyer enthused. Yahoo sees a clear fit for the technology. They see a broader application to more of what the company offers to its end users. The focus is on applying news-reading technology. In fact, the Summly service will be shut down. A large vision for the acquisition made it go down easier, quicker and with a higher price tag for the selling start-up.
• Wise sale. Nick said “a number of companies approached us” about a possible acquisition. Big corporations have staffs looking for start-ups that might be suitable for purchase. Buyer Yahoo has made six since its latest CEO has come aboard. Nick chose with criteria important to the future success of the technology he had created. And he sold, rather than strive to build a large company from this idea. Serial entrepreneurs know when it is a great time to cash in their chips.
• Quick success. From 2011 to March 25, 2013 is very fast for any start-up to succeed. It is rare. Even more rare is the large financial value for such a new enterprise. The chances of repeating this time-to-wealth are historically very slim.

BOTTOM LINE: Dissecting a successful start-up like Nick's Summly reveals a lot of the right things going on. When you can see them in new enterprises (or see them missing), you'll be well on your way to building your unfair advantage.

I wish you The Best on your Adventure!

MOVING FROM INITIAL THOUGHTS TO A GREAT START-UP IDEA: The process and some tips

"How do you move from your initial idea to something that is worth doing?"

"What should I do with my first idea to craft it into a killer app business plan?"

Those are important and typical questions that confront the entrepreneur who is new to start-ups.

Serial entrepreneurs know what to do to move through the process of converting first thoughts to great business ideas.

Today I'll use a real example to give you more insight to this somewhat mysterious process, so you can then apply it to your cool idea.

============

EXAMPLE

E= Entrepreneur

M = My response

==============

E: We have technology that can build a lab-on-a-chip. We plan to use it to monitor HIV patient's use of medicine so they can vary the amounts and get better results, improving their health.

M: How many are there?

E: About 2 million in the U.S.

M: Which are especially concerned with monitoring their health?

E: Those with geek tendencies, ages 20 to 40.

M: That would be about half of those with HIV. Which of those are extra sensitive to monitoring their health?

E: Ah, we had not thought about that. I guess the ones with the most income, how about a third of them.

M: So you are aiming at a third of half of two million, that's a very small market. Too small for venture investors to get interested.

M: What other health monitoring markets could you do, ones much larger?

E: How about pregnant women?

M: Yes, that would be a market large enough to pursue.

E: We could do that all over the world! That could be huge.

M: Right. Is there any one competitor doing what you are going to do, for pregnancies?

E: No, there are only a couple offering specific sample tests, non are doing on-going monitoring.

M: So you have a chance to become the Gorilla of a new market! Great news.

M: This idea fits under the banner of "personalized medicine," a rising tide lifting a lot of new boats.

M: What else could you do for your Ideal Customer? What else could you sell her?

E: Well, how about providing related health information. We could do a peer-to-peer discussion on our web site. And we could provide experts with free advice. That would attract advertisers.

M: Any ecommerce?

E: Oh, we could do affliate sales of baby things. We need to figure out the best strategic partners for that.

M: How could you get the doctors involved?

E: We could send the MDs the data from their patient, saving time and increasing the quality of healthcare.

M: That will make a fine cooperative arrangement.

========

I'll stop there with this example. I think you can see how the entreprenurial team moved from a weak initial idea to a very attractive one. Review the elements of the process and you will see what the issues were.

BOTTOM LINE: Your initial idea is going to change a lot by the time you get it ready for a real business plan. The process of moving, pivoting, morphing from the first thoughts to the great idea is a process worth its weight in gold. World-class angels and venture capitalists can do it very quickly. Serial entrepreneurs do it in split seconds. Doing it well lays the foundation for building your unfair advantage, so get started right now, apply the process to your cool idea and move on to the much improved next version. You can do it, others have, and they became big winners.

I wish you The Best on your Adventure!

WHAT IS IN A GREAT EXECUTIVE SUMMARY FOR A START-UP? Tips and tricks from serial entrepreneurs

"Why do venture investors want an Executive Summary?"

"What should I do to write a super Exec Summary that attracts great employees?"

Those are two important questions from start-up founders that deserve good answers.

Let's start with the first: Why do the people with the money want an Executive Summary?

Here is a quote from one of the most experienced venture firms, Canaan Partners. It is from their document explaining their investment process:

Canaan Partners has created a set of guidelines that we use to consider an investment opportunity. To determine whether an investment fits within these guidelines, we can review a written business plan or open a conversation with one of Canaan’s investment professionals. When possible, you should contact us through a personal referral. If you are not affiliated with the firm, you can send an executive summary along with your plan via email. The due diligence process will generally take from four to six weeks, but can be significantly shortened if necessary. When Canaan decides to invest, we will then work with the company’s management and advisers to tailor investment terms specific to the transaction. In addition, we have extensive relationships throughout the venture industry and can provide, where appropriate, assistance in assembling an investment syndicate of highly capable investors.

Note the additional tips within Canaan's advice, particularly the value of a personal referral. But even that will not get you out of preparing your Executive Summary because the investors, VCs or angels, rely on it. For them it is the first step in reviewing what you are proposing to do. If it is not interesting, then they have not wasted their time reading a 40 page business plan to reach a reject conclusion. They do as much as possible to save precious time. If you help them with a superbly written Executive Summary, they'll appreciate you even more.

Can you avoid writing an Executive Summary? It has been my experience that you will cannot, even if you have gotten an audience with a Partner in a firm or with an experienced angel. They always seem to end those 1 on 1 meetings with "And send me something about your idea." That will be an Executive Summary. They will then use it to recall you and your idea (they are so swamped with other start-ups that they forget about you). Also, it enables them to email something on to other Partners or angels whom they meet with to discuss potential investments.

Now let's address the second question: What goes into a great Executive Summary?

Here is a brief guide from Sequoia Capital, one of the gorillas of venture capital firms:

"What kind of excutive summary format appeals to Sequoia? We like business plans that present a lot of information in as few words as possible. The topics that interest us the most in any business plan are a description of the market the company plans to attack; an overview of the company’s initial product and planned products; a description of distribution channels; a summary of the backgrounds of the management team; a five year summary of financial projections; and a capitalization table. We place more credence in a 15-20 page business plan than a compendious compilation with attendant appendixes. We are very skeptical about placing too much faith in detailed financial projections beyond the first 12-18 months of a company’s operations and have a jaundiced view of reams of financial data.

Their advice works well and is supported by serial entrepreneurs. It's central theme is "BRIEF." But short and crisp is hard, while long and wordy is easy. So plan to set aside more time than you expect to write an Executive Summary that gets an investor or key employee candidate excited.

"What should go into an Executive Summary?" Here are some specific tips I recommend based on what I've noticed the venture investor and key employee are looking for:

• 2-4 pages long, about 10% of a complete business plan.
• Follow the outline of your complete business plan:

•Executive Summary

•Customer Need and Business Opportunity

•Business Strategy & Key Milestones

•Marketing Plan

•Operations Plan

•Management & Key Personnel

•Financial Projections

• Short and concise paragraphs only, don't waste words
• Include a "compelling" graphic, something you could talk about for an entire meeting.
• Write with calculated emotion, be determined to balance boldness with realism.
• Cite the status of your start-up and amount of cash you are seeking.
• I recommend you leave the company valuation for in-person discussions.

BOTTOM LINE: To get your money, to attract those key employees, you must stir their emotions. So your Executive Summary must be deliberately written. Keep it short, be complete, and aim at delivering excitement about your new enterprise idea. This may be the only written document you have a chance of using during the entire process, so write it well. When you can do that, you'll be on your way to building an unfair competitive advantage.

I wish you The Best on your Adventure!

ELEVATOR PITCHES FOR START-UPS: What makes one effective?

"You have 30 seconds to tell me about your start-up idea."

That's your challenge when you unexpectedly meet the venture investor (or talented potential employee).

In very few words you must deliver something so compelling that when you are finished, they will say:

"Step off the elevator, tell me more, you have 3 minutes."

Now your challenge is to deliver the richer version that increases the person's interest so much that they say:

"Interesting. How about meeting me for an hour next Tuesday at 9:00 in the morning at my office?"

That opens the door to pitching your full story about your new adventure.

And it all began with the 30 second elevator pitch.

What makes an elevator pitch effective? Here are some tips from serial entrepreneurs:

• Cleverness. It should describe something out of the ordinary, a business that smacks of large potential, a product/service that is instantly appealing.
• Mystery. Selectively choose words that entice, trigger desire to hear more, like a mystery story that grabs and holds the attention of the reader from the first paragraph.
• Boldness. Without childish bravado, be confident of your idea so your tone and demeanor deliver an impression of confidence and courage.
• Facts. Include numbers, just a few, only ones that suggest the business has large potential and any that support your claim that this could be a game changer, so you leave an impression of large numbers on the left half of the brain.
  
  
• Images. Pictures in the mind leave graphic impressions, so try to use a metaphor that conveys your idea and stamps a picture on the right half of the brain.
• People. Describe your core team, why you are together and what makes each a standout for your business.
• Why. Be sure to ask for the order, either the round of financing you are looking for, or the talented person you are hunting for.

There you have it, the key elements for an effective elevator pitch. Now try yours out, right now, without more practice. Then compare it to the above and start improving it.

BOTTOM LINE: Simple can be powerful. Elevator pitches can start an avalance. Short stories are very challenging to write well, so expect to do a lot of work before yours is in top form. Serial entrepreneurs respect that, it's one of their secrets to success. When you can prepare an elevator pitch as effective as theirs, you'll begin building your unfair advantage.

I wish you The Best on your Adventure!

IS YOUR START-UP FOCUSED TO WIN? Quick test shows where to improve.

"How do I know my start-up idea is focused enough?"

Great question, needs an answer, right now.

Here are tips from serial entrepreneurs I respect:

• Long, multi-word name for company or product/service. This is an immediate sign of lack of focus. Customers read and wonder instead of eagerly respond and make a purchase.
  
  • For example:
    
    • "Horizon Online Entertainment and Games Inc." tells customers you are very broad, wide and expansive in what you are suggesting. They wonder "Just exactly what are you selling?"
  • Better:
    • Company name = Horizon Inc.
    • Business = Causal games
• Vague, or no description of the Ideal Customer. When "customer" is used without more details, it is a tip that work is needed to focus more.
  • For example:
    • "Casual games for people" is pretty broad, lacks precision.
  • Better:
    • "Quick games to play when waiting in lines"
      
      
• Need to demonstrate your product/service. When you must show your product/service to people so they "get it" then you need more work. People must "get it" with just a few words. Write a 3 sentence explanation. Short, crisp, clear. Then you are focused.
  • Words instead of paragraphs: "Just click, launch and play, only seconds away."
  • After that, a demo simply validates your claim to fame. People already "get it."
• Have to educate people so they understand your offering. If your product description requires several paragraphs, each rather long, that's a signal that you have focus work to do. Try thinking of how your product/service does 1 thing extraordinarily well.
  • "Fastest way to kill time."
  • That is powerful, leaves an immediate impression, is compelling.
  • Just a few words.
• Afraid that focusing will miss the big market opportunity. "We want everybody to use it!" is a natural response. Yet that leads start-ups into a land of grey fog where they get lost. Far better to start with a crisp market segment, capture a lot of it, and then move on to the nearby, related markets.
  • Line up your bowling pins.
  • Divide your targeted market of Ideal Customers into separate segments.
  • Select 3 that are related.
  • Choose 1 of the 3 to be your first bowling pin.
  • Education
    • Secondary
      • High school
        1. Private
        2. Religious
        3. Large public
  • Games
    • Casual
      • Mobile
        1. Apple
        2. Samsung
        3. Nokia
  • You will build momentum, gain access to more and more market segments, and grow larger and larger, thanks to starting with crisp focus.
• Brand does not stand for something. What do you want end users to think of when they see the name of your product/offering? The great brands own a word or two. So should yours.
  • Search = Google
  • Cool = Apple
  • Social networking = Facebook
  • So for our example consider this:
    • Quickie games = Horizon

I think you get it by now. Focus is worth the time and brain work. Serial entrepreneurs do it constantly.

BOTTOM LINE: Focus brings power to your start-up idea. Concentration of force is the marketing principle. It gives your new enterprise the opportunity to excite a lot of very specific customers. They immediately "get it." That's what you want when you launch your first product/service. It is central to branding success. Focus also makes it easier for investors to "get it" so you get your money quicker. So work on more focus for your clever idea. It will help you build a powerful unfair advantage.

I wish you The Best on your Adventure!

FOCUS, SIMPLIFY YOUR START-UP IDEA FOR MORE POWER: One sentence per topic does the trick

How do you focus, narrow, and simplify your start-up idea (so it excites a lot of people)?

In my prior blog I discussed what to do when your initial idea for a new enterprise is not exciting many people: the remedy is to modify it, pivot it, change it so it is much more specific. The outcome of your work should be a refined idea that is much more focused, narrow and simple. That's what excites people to say "Aha! I get it! Terrific idea!"

This is very difficult to do, even for serial entrepreneurs.

However, there is hope.

I've learned a trick from the veterans of start-ups that you can try on your idea.

Fill out the following topical outline, USING ONE SENTENCE PER TOPIC.

• START BIG:
  • What is the big opportunity you intend to exploit?
  • What is the first product are you intending to offer?
  • How many users in the world are there for your product?
• SELECT A CATEGORY:
  • What is the name of the new market category your first product will compete in?
• SHARPEN IDEAL CUSTOMER:
  • Who is your Ideal Customer?
    • Describe the demographics of users especially attracted to your product.
  • What in your first product is compelling to your Ideal Customer that noone else has?
  • How many of those Ideal Customers are there?
• GIVE YOUR BRAND MEANING:
  • When your first product is branded, what do you want it to stand for?
  • What word or two do you want people to recall when they think of your brand name?

Your responses to this question should lead you to make significant changes to your initial idea. Test the outcome of your work on the people who first found your idea uninteresting and unclear. Listen to how they respond to your refined description and repeat the process until you find people eagerly responding.

BOTTOM LINE: When you find yourself disappointed by the lack of eager responses from people to whom you describe your initial start-up idea, begin a process of refining the idea so it is increasingly focused, narrow and simple. The power lies in finding a combination of very few words that excites a lot of people. That is a challenge for even serial entrepreneurs. But when you can achieve it, you will be well on your way to building an unfair advantage.

I wish you The Best on your Adventure!