Nesheim Online

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!

 

 

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!

SPONTANEOUS STARTUPS (PART 2): Learn from a real $300 million example

Spontaneous Startups just happen. Often very well.

Today I'll share an amazing example of a real new enterprise that spontaneously rose from nothing to sales of over $300 million (and climbing).

EXAMPLE

The startup is Wayfair.

Its on-line service sells "everything for the home."

Why don't you know about them? That's part of their story and it's a clever one, filled with excitement, risk and extraordinary success.

I highly recommend you read the well written story (just click on the Wayfair link above) in which the two founders, Niraj Shah and Steve Conine, tell how they moved from startup idea to startup idea until one day they found a very special idea for their new enterprise would become Mayfair. It simply "occurred to them".

As you dissect this amazing saga (it took years and a lot of hard work), keep the following characteristics in mind, they'll help you glean extra value from your thinking, they will generate things to apply to your own startup:

• Stalled with several startups, bailed (wisely) one after the other, until they got The Big Idea.
• Took no venture capital until success was very clear, years after starting.
• Stayed focused, did not get distracted during early formation years.
• Looked and looked and looked for a better idea than the one they had at the moment.
• Techies made the move to marketing savvy as a natural consequence of their processing of ideas.
• Settled on a very simple idea, yet one with huge potential.
• Bold vision: "determined to think big -- really big."
• Flanking Strategy: moved into uncontested territory, a new market not yet dominated by a Gorilla.
• Profitable from Month One.
• Quick to follow successful step after successful step (and to not repeat failures).
• Creative with cash flow management.
• Learned how to do the (retail merchandise) business by doing it.
• Avoided attacking Gorillas.
• Figured out what customers were frustrated with, solved that problem.

I'll leave the rest of the story thinking up to you. Read, think and repeat several times how you analyse this Wayfair story. Each reading offers to you the chance to glean a fine harvest of stimulating ideas for how to do a Spontaneous Startup.

BOTTOM LINE: Wayfair is a find example of how to do a Spontaneous Startup. You can do the same. Study the process the founders went through. That is where the low hanging fruit is waiting for you. When you "get it", you'll know the secrets that made serial entrepreneurs serial winners. And you'll be able to use your idea to build an unfair competitive advantage.

I wish you The Best on your Adventure!

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.

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

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!

CAN STARTUP CEOS BUY "GOING VIRAL" OR DOES IT OCCUR NATURALLY?

"That startup is boosting users by buying traffic for its app!" is what a serial entrepreneur observed this weekend during our discussion.

He meant that a related new enterprise had recorded rising numbers of users. That suggested a sign that the app was staging to go viral. But after some research the findings revealed the growth numbers emanated from hundreds of thousands of dollars spent to purchase traffic and users.

That reminded me of a trustworthy adage from wise serial entrepreneurs:

"You can't win a race running on crutches."

Neither can startups.

Unless you are competing in the Special Olympics, your crutches are a sign of a fundamentally weakness: you are in an undesirable position, unable to compete to win.

In other words, if your app is not compelling to end users, all the extra things you to to try to get users to get excited and use it are doomed to flop. A dead horse is a dead horse.

All the PR and blogging and shouting will not produce something insanely great if it is not insanely great.

If it is insanely great, you'll find users quickly raving about your app, spreading the word "Gotta have it!" to friends around the planet, all at no cost or effort to you.

After that it's up to you to reenforce their enthusiasm, contribute to the viral momentum (by continuing to deliver what your Ideal Customers eagerly are seeking), and enjoy the fruits of your hard, creative work with the users. That's what "marcom" pros, marketing communications professionals, are skilled at.

I don't mean that the app/product/service will sell itself. You'll have to put in a ton of hard work, be very creative and execute with skill and great effort.

I do mean that dressing up a dog in a beautiful gown does not overcome reality: it's still a dog.

This is why serial founding CEOs focus on making an app/product/service so "insanely great" that end users rave about it and can't wait to Tweet, Facebook Like, email, blog and spread the word around the planet. The startup winners avoid artificial traffic generation efforts, pushy PR work, and blog influencing because they have their hands full keeping the servers from crashing as thousands of end users/customers make accelerating purchases by the hour.

BOTTOM LINE: Going viral is a natural phenomenon. Trying to artificially boost traffic and end users only produces a brief rise in the inevitable curve of a mediocre app/product/service. As founder CEO, it's your job to morph what you have into what the end users rave about. Then your startup will "go viral" naturally. That will be the sign eagerly sought for by experienced startup employees, strategic partners and investors, as well as eager bloggers and reporters. When you can produce products like that, you are onto the path of the winners. It's a key part of how serial entrepreneurs build their unfair advantages.

I wish you The Best on your Adventure!

DAY ONE STARTUP FOCUS SURPRISES: What should be done and how?

Did you recently launch your first product/service and get surprised at who is using it?

Are you finding the users/customers widely spread, far flung from whom you expected?

Are you wondering in which direction to now move your startup?

Those questions are asked daily by entrepreneurs who have proudly launched their first product/service. Anything can happen after First Launch, including a lot of unexpected end users, customers, blogger comments and strategic partner reactions. The surprises lead to doubt and pondering by the CEO founder. The above questions pop up. Deep emotions are stirred in the souls of the Core Team members.

The related issues are important and need immediate responses. Like the newborn child, the fresh startup that is beginning to struggle needs swift attention before it becomes ill.

TIPS FOR RESPONSE TO FOCUS SURPRISES

Today I'll make some suggestions from my experiences with serial entrepreneurs, those intrepid souls who continue to figure out what to do to a fledgling enterprise so it grows with good health, very fast.

I'll begin with an edited email that I received today from a first time entrepreneur and then I'll show you the tips I sent.

ENTREPRENEUR'S EMAIL INQUIRY

We built the product and just went live a couple of days back! Please check us out when you get a chance at [NEW COMPANY ("NEWCO") WEBSITE] -as planned we are doing this pilot in New York. What do you think of the product? Btw, we also have one transaction in already.

I wanted to email you and see if I could interest you once again in advising me. This time it would be about how to maneuver NEWCO to success. This is very exciting milestone- seems like we traveled a long way from the idea we had 3 months back - but we understand that the first iteration of the product is only an artificial milestone! Now comes the part when how artful we are in discovering and validating our core customers will make all the difference.

I need some advice and guidance at this point. As you can see right away from the initial few services offered, NEWCO does not have one strong identity - people are offering all kinds of things from organic flour to management consulting advice on our service platform. We originally thought of this as a place where people can [proprietary service of NEWCO] and I think we are convinced we have people who will want to use the site. But who will be our core buyers - whom should we focus on? It's getting tricky. This might seem like a basic question, or perhaps we should have already known the answer to this by now? If you have any pointers/thoughts/suggestions that'd be really helpful!

STARTUP COACH REPLY

Hi Kim,

Always pleased to view a fresh entrepreneur in action, especially one from Cornell.

My advice for you today is to “Think about what you want people to think about first when they recall the name of your business.”

That will help you Focus.

It will lead you to the Marcom Messaging that will brand your company over time.

What do you want your company to stand for?

Then compare that to related new enterprises. There are a lot more these days working on a business model similar to yours. That will help you with your Competitive Positioning.

 Hope that is helpful.

JOHN

BOTTOM LINE: Get ready to alter your expectations as soon as you launch your first product/service. Surprises are most likely to happen quickly. Dissipation of focus is the enemy. Chasing every rabbit is unproductive, and leads to dwindling of scarce resources. Instead, serial entrepreneurs stand back while collecting the latest pattern of end users, customers, blogger comments, and strategic partner input. Then they analyse the findings and choose a focus for the new enterprise, one often very different than first planned during pre-launch days. The fresh input is then crafted into a revised (often very different) marketing communications message that is compared with competitors and modified further. The end result is a Positioning Plan that becomes a powerful element in constructing an unfair advantage based on delivering a product/service so compelling to end users that they shout "WOW!" and start Tweeting immediately. Serial entrepreneurs know this is very hard work that kicks up powerful internal emotions, but it is vital to do this swift response very well. When you can do that, it can lead you to become one of the great veterans of real startups.

I wish you The Best on your Adventure!

SECRECY IS THE STARTUP FOUNDER'S FRIEND: How to get well known without revealing critical startup secrets

"How do we get money, attract employees, and do deals with strategic partners without the whole world (and all the competitors) knowing what we are going to do with our vital secrets?"

That's a question I am frequently asked. It is a very important question, so let's look at what serial entrepreneurs do about that issue:

1. Investigate before you open your mouth or send emails. I have had sad founders tell me they presented to VCs who had already invested in their competitors. Others said they gave away vital secrets when interviewing employee candidates (who were comparing direct competitors during job searches). The First Rule is: BEWARE! Start by assuming the worst could happen and you'll be avoiding critical communicating mistakes.
2. Build your unfair advantage before you start communicating. Are you afraid to tell someone what you are about to do? Then you do not have a strong competitive advantage. You just have an idea for a new enterprise. When you have built an unfair advantage, you can publish your bplan in the Internet and still be confident of launching successfully.
3. Learn to strip tease: Start by taking off just one glove, and asking for order (for the seed $, a commitment to join your startup, to do a deal, etc.). Keep removing clothing until either you get what you want, or get uncomfortable and decide to stop and depart. This is especially important when speaking with potential venture investors. They see a lot of similar startups like yours. They are notoriously leaky with proprietary information. It's the nature of the VC business. They talk a lot.
4. Go into action with confidence. You have something "cool" (in MBA language, something of "high intrinsic value added"). Go for what you want, what you need next, with a positive attitude. Think with courage and conviction: to VCs tell them "If I like you, I might let you invest in my startup." Don't stand there like the guy with the cardboard sign and tin cup at the roadside.
5. Prepare a great Elevator Pitch. Get your 30 second speech ready.  It is designed to get the other person to say "Tell me more." Then in 3 minutes you can take breaths between sentences and tell the person more. That is designed to get you the hour meeting in their office. It all starts with a very intriguing Elevator Pitch. Small is powerful.

BOTTOM LINE: Plan your communications carefully, assuming what you say will spread around the planet quickly. Be wise in whom you speak to, be crafty in what you tell them. Keep as much secret as you can before launching your first product. And most of all, before you communicate, build your unfair advantage. It is central to how serial entrepreneurs become successive winners. So can you!

I wish you The Best on your Adventure!

HOW CAN MY START-UP CUT THROUGH THE NOISE? Tips from the serial entrepreneurs

So you've got a great start-up started but feel like you are lost in the crowd? Can't get attention or respect? Lost in the herd of start-ups in your space?

How does a serial entrepreneur "cut through the noise?"

Here are some practical tips I've learned from the best (and worst) of the bunch (of start-ups) over my too-many years of working with ambitious entrepreneurs like you:

• Start-ups fall into two categories: LIFE or DEATH
• LIFE start-ups give birth and succeed.
  
  • DEATH start-ups are dead-on-arrival and should be quickly buried.
• LIFE start-ups do something never been done before.
  • DEATH start-ups do "me-too, better" things already done by someone else.
• LIFE start-ups start a new category (social networking, location-based-services).
  • DEATH start-ups enter an established category that everyone knows about.
• LIFE start-ups enter a fresh market not yet dominated by one company.
  • DEATH start-ups attack an established market dominated by a Gorilla (Facebook, FourSquare).
• LIFE start-ups think global, world-class, all over the planet, from the day they are conceived.
  • DEATH start-ups think "local", small.
• LIFE start-ups create "WOW!" in their product/service that thrills end users, customers and bloggers.
  
  • DEATH start-ups are undistinguished copy-cats that bore everyone.
• LIFE start-ups are so exciting that they "go viral" because people cannot wait to spread the word around the planet.
  
  • DEATH start-ups are so boring they think they have to advertise or do shocking things to get attention.
• LIFE start-ups have assembled the elements that produce an UNFAIR ADVANTAGE.
  • DEATH start-ups have no competitive advantage.

BOTTOM LINE: Life or death, the choice is yours. You'll "cut through the noise" when you are a LIFE start-up. If not, quickly dig a trench, bury your start-up and go on to do a LIFE start-up next. This is not rocket science. It is essential for you to learn. It is what it takes to thrive (not die). When you "get it", you'll understand how to build an unfair advantage. You WILL stand out in the crowd, cut through the noise.

I wish you The Best on your Adventure!

 

GREAT START-UPS START WITH "CATEGORY" (NOT BRAND): The BIG marketing mistake of first time entepreneurs

Where do you begin creating the marketing plan your start-up?

• Get buzz?
• Get loud?
• Get crazy?
• Get crass?
• Get lowest price?
• Get highest price?
• Do surveys and research?
• Great slogan?
• Great logo?
• Toss it on the market (and keep your fingers crossed, pray it will "go viral", somehow?

Those are the real responses from entrepreneurs I've talked to recently.

My response to each was "What is your new category?"

None of them had a good response to that question.

Yet that is where the serial entrepreneurs start. Search (Google). Microprocessors (Intel). Smart phone (Apple). The veterans know they must figure out "the new space" (or invent and name it) before they can do the challenging marketing work needed to win.

Most of the first time entrepreneurs who contacted me turned out to be entering an existing category. That was revealed by their inability to respond with the name of the new category that their idea was going to enter. The result: they are start-ups doomed to "faster-better-cheaper" disease. Veteran VCs and serial start-up employees will get it and not bother them any more. Bloggers may comment once and then forget them (even if the founders think they have something "way cool").

You have to play in a new space to win the start-up hearts of end users, customers, strategic partners, employees and suppliers of cold cash. They already know where to go for things (brands) in the existing categories.

In other words, you have to see and name the new space (e.g. social networking) before others do. Or at least you need to be entering a very fresh new category before a gorilla has risen to dominate it.

If you still don't get it, watch Al Ries (one of Advertising Age's Top Ten Living Marketing Gurus) explain it.

Then just go do it.

BOTTOM LINE: Start your start-up's marketing plan by naming the new category you are entering. Only after you can do that should you do your logo, names, messaging, positioning and PR-viral campaign. Getting over that hurdle is mandatory. Without accomplishing that, you'll never be able to build an unfair advantage.

I wish you The Best on your Adventure, especially this Easter and Passover week!