Nesheim Online

RE-DEFINE THE MARKET AND WIN THE BATTLE: Serial startup CEOs do that to win

MySpace.com was in the market far ahead of Facebook.com. Facebook re-defined the market space (innovated a new category) and took over the lead (measured by the rate of new users signing up). Serial entrepreneurs do that to win. They find new, unoccupied spaces to dominate. They avoid fighting head-on wars.

When you are looking at a gorilla in the space you intend to attack, think again. Attacking the Defender using the Offensive strategy demands that you focus on a single weakness in the gorilla. Most of the time the gorilla Market Leader quickly covers the exposed weakness and the Offensive attacker bleeds to death.

It is wiser to use the Flanking strategy. Find an uncontested market segment. Something fresh, large and growing, with room for competitors, including you. Give the new category a new name. Focus all your effort on taking over the lead in that fresh market segment. That is the winning strategy for startups.

COMMODITY
Sometimes your "Wow!" factor depends on a feature. It may be superior fidelity, or look and feel, or speed or less power. But those are features that will quickly be copied close enough by competitors to turn your product into a commodity. A commodity is a product that cannot be distinguished. You cannot build a brand with a commodity. You get a quick lead but competitors rush in and try to do the same as your company. Soon "everyone is doing the same thing" and yours has become a commodity. Then the VCs cancel their appointments with you, recruiting gets tough, bloggers get confused and customers yawn.

REDEFINE THE MARKET
When you find your space suddenly buzzing with annoying competitors, make your move: redefine the market. Find a fresh space to focus on, one you can be branded in. Look for your product to be much more than a thing. Add value to it so it becomes so valuable to customers that competitors cannot duplicate it.

To do that you will need a fresh positioning. That is the psychological space in the mind of your ideal customer, the space no one else yet occupies. Expensive premium coffee, Starbucks. Search, Google. Portal, Yahoo. Yours. Branded. That is no longer a commodity. You own it. Congratulations.

Yes, it is not easy. But nothing worth doing is. Right? Right.

So get clever. Be innovative. Learn from the veterans. Remain positive. It is not walking on water. Many have done it before you. So you can do it, also.

BOTTOM LINE: Focus on uniqueness. Run away from better. Or quicker, or more beautiful, or less power. Go for the gold. Find a new market segment to dominate. Do your homework, your market research. Then have courage. Execute with brilliance. Then you'll avoid getting sucked into a losing game. Winners are differentiated. That's what they brand. It is central to building your unfair advantage.

FOR CEOs ONLY: 乱世出英雄 How to manage the process of running out of cash

Today I got an email from a very intelligent young man born of a poor family in China who is wise for his young years. He sent me an old Chinese saying " 乱世出英雄", which translates into "The tumultuous times have the hero".

That was "spot on" as the Brits say it, for a recent conversation I had with a CEO. His successful company is moving through a valley of negative cash flow to the other side of the chasm where huge orders are waiting for delivery later this year to global giant customers. A nasty competitor is doing unethical things to make his life terrible in the meantime. The startup is forecast to run out of cash before the end of this year.

No, I am not writing about your company, so please spare me such emails.

But it is true, your startup will run out of cash during its first years of growth. So get prepared. You will not avoid the situation if you are successful and grow fast.

So here is my question of the day for you: "How would you manage your startup in such a condition?"

Consider these tips from veterans of startups, investors and serial entrepreneurs who I have learned from:

• Face reality. It is going to happen.
• Be certain. Sit down with your core team and work on the numbers. Expenses and revenue, equipment purchases and cash collections from customers and payments to suppliers.
• Mark the date when you will run out of cash. Tell everyone in your core team and board of directors. They will guess if you do not give them the date. And be prepared to answer that pesky employee who will ask you the question during your next all employees meeting.
• Have your numbers ready. Know your burn rate by memory, by month, especially the lumps for large purchases or slow collection of receivables.
• Don't lay off the receptionist. The small headcount cuts will save you only a mere few weeks of time before you run out of cash. Stupid is not wise. Keep the company free of dead wood and people who cannot keep up with the work load. Lean and mean is one way of thinking about this condition.
• Get everyone into action. When in cash flow trouble, create Operation Recovery. Give it a name. Build it with your core team. Focus on getting through the negative cash flow valley and over to the green grass of large orders on the other side. Everyone wants to contribute some special effort. They feel good when they do.
• You are not alone. You have people cheering for you. More than you might think. Get the whole startup working together on Operation Recovery. Delegate to your core team. Ask your investors for assistance and ideas. Talk to other CEOs. Your lawyers and CPA partners can be of help.
• Trust a Higher Power. These are times for calling on spiritual help. The personal pressure can break you. Veterans are wise and old for good reasons, including their acknowlegement that they call on their religious and spirtual sources when the valley of negative cash flow has gotten very dark, very deep and very scary.
• Remind yourself that the glass is half full. Global startups all have negative cash flow. For longer than they planned. Much longer. Your situation is not unique. People are in the same boat as you, around the world.

BOTTOM LINE: Plan on running out of cash. Then execute your plan. Get going. Worrying is not going to make things better. Gather your core team. Build your recovery plan. Be wise about what you say to employees and investors. Get the entire company involved. More help is better than you alone. Do not try to do a miracle single handed and in secret.You need all the help you can get, even including spiritual assistance. When you can manage running out of cash, you will have added one of the most powerful skills to your tool chest. Use it to build your unfair competitive advantage.

STARTUP FLY FISHING: Expect the uncontrollable to happen when managing your startup

I learned something helpful during my last five days fly fishing a world-class wild river in upper California.

Just like in fly fishing, managing a startup is full of uncontrollable events that you have to adjust to.

Here are a few things to think about as you look to improve your startup managing skills (and try to stay sane at the same time):

• Your planned trip can turn upside down by the time you start off on it. Three months ago I planned a trip to The River, got my flies ready, practiced my casting, got my gear ready, lined up my a great guide and my fishing buddy, and marked my calendar in ink "Gone Fishing" "
  
  • [You worked hard to finish a great business plan. It contains everything needed to mark your plan to IPO victory. You press the print key and out comes a great sounding plan.]
    
• WHAT HAPPENED: 
  • The fishing guide whom you booked has to reschedule.This is the expert who knows very well The River and its fish. In spite of your confidence and experience, you decided to secure the finest adviser you could find. The guide you selected is highly regarded, so skilled that he can catch fish when no one else can. But for personal reasons, he has to move your date for fishing with him.
    
    • [The key adviser you have been counting on assisting you has to change the amount of time and when he can begin to help you. It hurts even more because he was to be your main angel investor in your seed round.]
  • Three days before departure, your buddy gets sick and cancels. You have to scramble and find a fishing buddy substitute, knowing it is very difficult to fine quality fishers on short notice.
    
    • [Your core team members, one or all, announce they will not be able to join you to do your startup.]
  • The weather changed. Record hot weather hit, melted too much snow too fast. The rivers turned to chocolate, became very fast and deep, nearly unfishable two weeks before departure.
    •  [Your market becomes too hot, too fast, attracts too much attention before you are ready, VCs back off and competitive threats rise rapidly]
  • Too many other fishers showed up on The River before you. Your planned fishing holes have to be abandoned and Plan B holes are substituted.
    • [While you start building your first product, other startups launch before you. War begins before you have loaded your guns. You decide to abandon your Plan A and move on with Plan B as a substitute.]
  • Your first and then second and even third flies fail to attract your targeted trout. Your carefully selected, meticulously tied flies, beautiful creations all, are cast on the water and to your dismay, nothing great happens. A couple of small fish take a nibble, but the big fat ones ignore your flies and instead grab the flies of other fishers just upstream from you.
    • [Your first product fails to attract many end users and the bloggers ignore it. You scramble to try a second and even third product and they also fail to get much more than tacit attention from targeted end users.]
  • You find fish eager to grab your flies in the places in The River where you do not expect them. You keep trying, patiently, with determination, to find a place where the trout will be attracted to one of your flies. And finally you succeed. But you are surprised! And you miss setting the hook fast enough to catch the first one or two fish.
    • [You keep on looking, presenting, poking around, looking for eager end users. Suddenly they show up! And you are not ready for them, they are so different than you expected. Unfortunately you deliver less than the best first products and customer service is below standard.]
  • You focus on using the one fly that works.That is the wonderful fly that hooks all the fish. So you abandon all others and start fishing the magic fly with full energy.
    • [You now focus on the special product that attracts end users. You abandon all plans to add more products or go after other geographical markets.]
  • You cleverly present our flies with movements that entice more and more fish bite. At last you are hooking a lot of nice fish! And as the hours move on, you are soon catching them more and more fquickly.Your energy rises and so does your catch rate!
    • [Your sales and marketing staff present your story with words that entice even more end users and customers. The end user numbers climb higher and higher each day. Customers start calling you faster than your sales people can call them. Your Chief Financial Officer begins to record sales and cash coming in, faster and faster.]
  • You finally land The Big One. At last, that fat trout bites and after an epic battle, you land it (and photograph it and carefully release it, unharmed, into The River).
    • [That big customer, the Fortune 500 giant, signs the deal after months of hard work and determination to overcome all barriers. You get the huge order, at last! (Unlike fly fishing, however, you keep the order from The Big One.]
  • You return to camp tired but elated, telling all about your amazing fishing trip. You share with other fishers your epic adventure and its surprises, start your stove and cook up a super meal. As you wearily climb into your sleeping bag, your last thoughts are of how worth while the day was in spite of how tired you feel.
    • [At the end of your first year after launch, you announce victory, tell bloggers, email the rest of the media, then gather your fellow CEOs and share your adventure. You celebrate with a banquet for all your employees, drive home elated, and crawl into your bed thankful for such an amazing outcome of so much hard work by so many fine people.]

BOTTOM LINE: There are lessons for startup managing in much of our other worlds. Learning from them is one way to become a superb CEO of a new enterprise. As you learn more and more, you'll add more and more strength as you build your unfair competitive advantage. I wish you Great Fishing!

COMMUNICATING WITH YOUR BOARD OF DIRECTORS: Herding cats is not easy but you have to do it well

I listened to experienced venture capital partners today as they made suggestions for improving the processing of decisions for an early stage startup that I am close to.

After I hung up the phone, I reflected on what has been going on that precipitated the discussions. In a nutshell, a first-time founder CEO has yet to gain control of his process of communicating with his board of directors. The board is composed of two founders, two top tier venture capitalists and a fifth startup veteran. Board meetings occur monthly.

In every startup, between board meetings decisions are made and issues are discussed.

The trick is to know when to call for a (short or long) conference call and when to spend time one-on-one with board members. If you spend most of your time on-on-one, you'll find yourself loosing control of the decision-making process. You'll be telling Joe second hand about the discussion yesterday with Chan whom you told about the lunch with Kim the prior week. It can get messy and confusing, very quickly.

Here is a tip from a veteran with lots of scars (I have made most of the related mistakes twice or more in my colorful past):

• At the board meeting declare the issue that needs a discussion (e.g. "We need to hire a chief financial officer in the next months.").
• A short discussion and questions will then transpire (e.g. why now, would you use a recruiter, what level of experience would be best, etc.).
• Then tell the board you'll call each to listen to their suggestions over the next week or so.
• After you have listened to their ideas one-on-one, document your decision and get prepared for seeking their approval (hire a CFO via head hunter James and Jones over the next five months and aim to find the candidate that fits the job description and compensation package you have documented and sent to all of them).
• Lead a conference call focused on that single decision. If it requires legal approval (e.g. hire a corporate officer, sign a long term lease or agree to a contract with a strategic customer), have your lawyer listen to the conference call and then document and communicate the formal note about agreement to the decision.

This process can be repeated for each significant decision. It is simple. It boosts the efficiencies of the decision-making. It saves everyone a lot of time. Otherwise, you will find your board wondering if the company is getting out of control. The VCs will begin to look at you, the CEO, as the person who might be best to replace,soon.

BOTTOM LINE: Establish a process of decision discussion and decision-making that works for you and your board of directors. Think of your board as a team that must all be in the same room (or on the same conference call) when you make important decisions. Think of the time between decisions at discussion moments for one-on-one chats. Keep the chats to a minimum. Gather your board to discuss (at length if necessary) the big decisions, outside of board meetings. Then your board meetings are mostly information dissemination gatherings and are not subject to surprises and poorly prepared board members. This is an important skill to learn as a CEO. Your success with it will greatly determine how long you remain as CEO. Why? Because it is a key element in building the unfair advantage of your new enterprise.

Get Rich in South Africa? Study a new wave and learn from its entrepreneurs

"I really believe that the foothold for mobile banking will come out of the developing world."  That is what the chief executive of Wizzit a Johannesburg, South African startup is confident and excited about. Since its founding and launch in 2005 the startup has done remarkably well even (by Silicon Valley standards) by being different.

Did you see that wave coming? If you did, would you know how to surf it with a fresh enterprise? Do you think you can be distinctly different and still be successful?

I've been examining with increasing interest some of the startups in Africa and other developing countries. They have my highest congratulations. Such enterprises have done amazing things successfully working in challenging conditions.

I find it useful to examine such pioneering startups to learn something from them. Check your startup with the following observations I have compiled for you from my look at Wizzit and see if it helps you think about crafting a better plan for your startup:

• A big need in a big market opens the door. What if everyone does banking via a mobile phone? That is a huge market. Room for a lot of competing companies. Chances for focus and specialization. CHECK: How large is the need for your idea? How huge is the number of potential people who benefit from it? This is the time to think B-I-G.
• No gorilla yet dominates the new space. In 2005, there was no company, either startup or established, that dominated the mobile banking market. That left room for a startup to enter. CHECK: Is there a startup or large public corporation that is already leading in your targeted new market? That is a bad sign if you are thinking of entering a new space.
• Moving into uncontested territory is a successful flanking strategy. Wizzit avoided picking a fight based on a weakness in either a mobile phone services company or a bank. Instead, the company chose to battle in a new space that no one yet cared about or believed in. CHECK: Is your startup trying to be "better, quicker, cheaper" than existing competitors? If so, you are using a head-on offensive strategy that has a poor track record of successes. Consider instead finding an uncontested, fresh market for your idea.
• Have lots of patience and plan to have cash in reserve. Three years after launching, Wizzit has yet to make a profit. That means investors have to supply cash in exchange for shares in the startup. Venture investing is a long term, very high risk game. You need who are patient. Wizzit investors include the World Bank. CHECK: How long do you expect your startup will be unprofitable? What does your five year cash flow forecast tell you? Does your plan create enough value to compensate investors for their risk? You need to have answers for those questions before you talk to investors.
• Deliver a compelling reason for customers to purchase. The key word is "compelling." It is such a good idea that an unusually large portion of potential customers quickly get excited and buy on the spot. Wizzit made it very easy to open and use a new bank account, at a very low cost for fees, paying only for services used (unlike traditional banks). The company is growing, expanding, as larger numbers of users bank via mobile phone. CHECK: How excited are customers about your offering? Can you give enthusiastic references of potential customers to investors? Did you even bother to talk to possible customers about your idea?
• Use buzz, public relations, to spread your idea to customers. The chief executive, Brian Richardson, has become a fixture at international conferences where he talks enthusiastically about the transforming economic power of mobile banking. That is a lot less expensive and much more effective than spending on advertising. CHECK: What is your plan for spreading the word abut your idea? Can you give details, a time line of events and a budget? It is central to your success. Investors will look for your ideas.

BOTTOM LINE: There are a lot more things to learn from Wizzit. Just a few are cited above. You may live in a rich city in Europe or America, but you can learn a lot from unusual entrepreneurs in less rich markets you never thought of. Contrast your business plan with the unusual startups. Reflect on what is triggered in your mind. Look for ways to add strength to your idea. That is how to build an unfair competitive advantage.

FOR CEO'S ONLY: What (in this startup) are you good at?

"What in the world are YOU doing at this startup?"

That is a stinging question tossed at entrepreneurs by a VC whom I respect. He does it to evaluate the CEO and make his investment decision.

First timers and even veterans see this as demeaning and negative. They react defensively with hurried exclamations that they are able and determined to make the next Google out of this idea, pull the company through the swamps filled with competitive alligators and snakes, avoid traps and pitfalls, overcome storms and disasters, create awesome results in the shortest time, and about everything else, single handed, including walk on water.

So after a quiet chuckle, the VC tries to figure out the true story and make a decision to go or not go with investing in your company.

I find the fundamental purpose of this question very important. Most inexperienced startup leaders do not realize how important to VCs are the special skills are of the CEO and each of the core team of managers. Veteran VCs will quickly tell you the game is all about people.

So how would you, the CEO, answer that stinging question? Here are some suggestions that I have seen work well:

• “I am a builder” works well if that is what you do well. Building an organization that builds a great startup is fundamental to leading a new enterprise. Look at your resume before responding.
• ”I am the startup’s chief recruiter” is what you say if that is what you do best. I’ve seen several startups grow successful because the CEO was outstanding at finding and hiring great people. One example is John Morgridge of Cisco.
• “I am great at execution” of bplans for startups. Doing a plan is very difficult. Startup experience executing a plan with success is very valuable. Point to your career and get your references ready.
• “I am great at sales” is that Larry Ellison of Oracle told investors. The rest is history.
• “I am skilled at raising capital” works if that what you have done. Be sure to have a track record that reflects it.
  

Note that each response is singular. That is focus. You do not get an enthusiastic response if you say you are a “good general manager”. That is for MBAs of large corporations to do well. In a startup you are expected to be outstanding at some specialty.

So if you are that focused, who is doing the many other things required to run the startup? The answer is simple: the core team is running the company. The CEO will use 20 percent of his time raising capital for the rest of his startup life. Another 20 percent is consumed by continuous recruiting. So the skills of vice presidents are very important, in fact critical to the success of the startup. In other words, investors expect a complete management team to run the new enterprise. It is not all up to the CEO. He does not have to be a god of everything. He just has to be outstanding at something important to the startup.

BOTTOM LINE: Focus. Yourself. Choose. And practice your short speech in response to the stinging question “What in the world are YOU doing in this startup?” When you can respond with a focused reply and point to the rest of your team’s special talent, you will be well over the first and primary hurdle in the way of raising capital from world-class investors. That skill is central to building your unfair competitive advantage.

FOR CEO’S ONLY: Know VC deals (or get stuck with a loser)

How do you know the VC offer is a good deal? What round of financing deal are you willing to walk out on? What terms of a round of financing are deal busters? What is the wisest company valuation for your next deal?

During my recent two week vacation break (fishing in merry old

England

and visiting family in

Germany

) I was involved with people needing answers to the above important questions. So I’ll share with you my responses (email is with us to the grave) along with a few cloaked examples.

• You have to know the market for VC deals comparable to yours. A good deal is a relative measure. Its merits must be compared to those of related deals. What were the size and terms of the last three venture capital deals done with your competitors? How about terms of the hot deals in your general industry category? Those are what you should be ready to compare your deal to. (Here is what was said by a CEO responding to a VC claiming too much money ($50 million) was being raised in a B round: “I’d like to put that into the context of history. The OtherCo has raised three rounds of venture capital in five years for a total of $65 million, has only recently attained revenue in excess of $15 million per year, and that was done by around 90 employees using a rather old technology and business model.”)
  
  
• Research the details and circumstances of comparable deals. The numbers can be found even if the deals are private. You ask and ask and ask until you get the data you need. The sources are many because such a large number of people and organizations have their lives dependent upon the trillion dollar venture capital startup company market. By far the best source is other startup CEOs, past and present. Daily monitoring of deals done is required (try VentureWire Alert ). Yes, it does take minutes away from your precious time, but it is one of the most important tasks that you, the CEO, must do. This knowledge is truly the source of the proverbial deal maker’s clout and negotiating power. (Here is how a founder responded in friendly joust with a pushy VC during the initial presentation of the startup’s bplan: “Well, I would say that we represent an opportunity to invest in the seed round of the next Google. That would put a pretty nice feather in your cap, one you would not have to miss this time.”).
  
  
• Decide on your goals and walk-away numbers. Set your goal (“Raise $50 million with a post money value of $150 million with a closing by the end of the year.”). Decide on the lowest acceptable offer (Keep it a secret!). Document your “ideal term sheet,” the one you want to hand to the venture firm preparing to make you and offer to do the next round of financing for your startup.
  
  
• Calculate the time to zero cash and prepare the tactics for walking away from poor offers. Know when you are going to run out of cash. Plan to avoid acting in desperation, having to accept a terrible offer just to avoid missing payroll. Raise your money in waves of effort. If the first does not succeed (“We could not get one of the first ten VCs excited enough to get a good offer.”), then start the second wave based on what you learned in the first wave. 

BOTTOM LINE: CEOs know the market for good and bad venture financing rounds. They have the examples and numbers memorized. They are fluent in deal making. They are skilled at raising money. When you can do that, you’ll add a powerful element to your unfair competitive advantage.

FOR STARTUP CEOs ONLY: Jump on opportunities, wisely

What a week this has already been! Filled with amazing surprises that remind me how special ("different") a job the CEO has in a startup. It is not classical corporate MBA territory.

Here is one thing that popped out to me: this is no job for people who plan on executing their carefully prepared plan and being rewarded for that.

Why? Because too many things happen suddenly. The unpredictable happens. The lucrative "blue bird" lands on your window without notice. The great news was not in your plan. And the terrible surprise smashes your precious plan.

Here are a couple of real examples that I am close to:

• Customer 3 tells his friends and soon you realize you are swamped with hungry customer candidates. But you don't have the sales people to respond. The CEO jumped and the VP Biz Dev got the green light to scramble (code for spend more time hiring and less time selling). Soon four outstanding sales people joined the new enterprise. The orders began to accelerate far beyond plan projections. So did the burn rate and the need for the B round to be closed much earlier.

• Slow Giant Customer finally says it is ready for an order (of very large size) but tells you they want a custom version and are interested in buying a large portion of your company. The CEO jumped and soon the core team emerged from days of intense work with a plan. The custom code would be the basis for the architecture of the next generation product. That would save two years of time to market.

• Competitor ABC launches a game that is wildly successful overnight in China. The CEO of the competing startup sees this as a huge validation of the target market and has his core team hop on planes to accelerate entry into China. Cash burn plans are scrapped for a new one that calls for a much earlier B round (and faster growth in revenue).

• Public Corporation Competitor Z sues the CEO's startup over a doubtful matter, intending to delay the startup's sales progress and confuse customers. The CEO rallies the board and core team who work out a fresh plan to leverage the energy of the legal efforts into even more sales.

None of those significant events were in any business plan.

All of them open huge doors of lucrative opportunity.

To take advantage of big opportunities calls for cool calm in the face of emotional shock and intense competitive fire. Courage and boldness are high on the list of what the CEO and board and core team must exhibit. And a great deal of wisdom is called for, especially from the board of directors.

These are not times for rage and anger, or testosterone highs.  Those chemicals make a  mess out of your brain, clouding its ability to make clever moves and clear decisions.

BOTTOM LINE: Some say "execution is everything" in a startup. Responding to the unforeseen is a big  part of that. This is a game of risk maximization, not risk reduction. Focus of tiny resources on the most lucrative target is how to win, to become the next gorilla. Shifting the focus is very risky, but oftn very necessary. Even if it means abandoning a huge part of your carefully prepared plan and jumping to exploit the unexpected opportunity. When you understand this, you'll add a rock solid element to building your unfair advantage.

MARCH TO IPO (Part of a series): What comes first? Money or people?

"John, I have a great idea for a startup. Should I next go get some angel money and get started? Or should I find the management team first?

That is a great question. It is central to the success of building a startup. Here is what I have learned:

• People are more important than money. People do the work and without them, money is idle.
• People attract the money -- not the reverse. If you find people who will not join you without the money in the bank, they are the wrong people to join you to do your startup.
• Money invests in people -- not ideas. People have the idea. They give life to the idea. Money wants to invest in great people with ideas, not ideas missing great people.
• Ideas need both people and money to grow. Plan with your people when to get the money, how much, from whom, when. Like watering a garden, you need to be wise, neither over or under watering, choosing the right times to pour on the water and other times to refrain.

So think about a triangle with three elements connected: People + Idea + Money.

Then think about the sequence to connect them: (1) One person gets an idea => (2) The idea attracts the core management team => (3) The people attract the money. This is described in detail in "The 14 Steps to IPO" in my book, High Tech Start Up.

What is hard about this for solo engineers is the attraction of the people. Engineers think they can take a great idea to venture capital investors, get the money and hire a recruiter to get the management. But that is not how to create a world-class new enterprise.

Next time I'll address questions about how to find great people for your core management team.

BOTTOM LINE: Start with finding the people. It is worth the extra time it takes. Wise entrepreneurs work for years to create a core team. After that they go after good ideas for the core team to use to form a great startup. When you understand the power of that principle, you'll be well on your way to forming your unfair competitive advantage.

PERSISTENT STARTUP CEOS: Startup leaders need it to get to the finish line

CEO E. cheered from across the Pacific and CEO A. kept on driving forward his startup in Seoul. Both are startup CEOs leading their early stage ventures through the early launch stage of their new enterprises. Each has demonstrated that they have many of the skills of startup CEOs that I discussed in my blog of January 29, 2008.

One characteristic, resilience, has a cousin skill, persistence. E. and A. have shown that they have that skill.

In E.'s case, he has succeeded attaining a deal with a global strategic partner after months of heavy work by all the employees of his stealth startup. I cheered when I read his email last night. A few more of those and the "Wow" lights will start flashing around the world when the new enterprise becomes uncloaked. This company has what it takes to become the next Google of a new space. Stay tuned.

A. is in the middle of a large financing that will fuel the launch of a world-class product in Asia. He and his co-founder have been determined to succeed in a new entertainment space. The entire company has worked long hours very creatively and recently finished the first product. First-time viewers are amazed, breathless. The financial backers have wisely seen the persistence of A. as he and his co-founder have gotten so much done with so few resources.

Both of these CEOs know they have a long road to travel on their startup adventure. The goal is clear: go IPO in 3 to 4 years. Meanwhile, both will face setbacks as well as successes. That's where resiliency is needed in the CEO. Their lessons learned during their prior years of persistence will give them confidence they can get back on the horse and keep on riding, even after the inevitable-to-come bombshells land.

I admire startup CEOs. They do one of the most difficult jobs on the planet. They are hard to find. VCs know that best of all. And serial startup employees, those are very special talented humans who look for this kind of talent in CEOs.

BOTTOM LINE: Look for examples of persistence in the CEOs of startups you join or invest in. If you are presenting yourself as CEO, keep handy your personal stories of persistence. All the stakeholders want to hear about them. That will add a strong element to your unfair advantage.