Nesheim Online

STARTUP COMPANY CULTURES: Central to becoming the Gorilla of your market

Every great startup -- the ones that become the Gorilla of their jungle -- have CEOs who are passionate about "company culture".

Company culture is so important to serial entrepreneurs that they would rather skip hiring a skilled person if that individual did not fit the company culture.

The startup veterans have learned life is too short to try to do a startup with a lot of people who fight the company culture day after day after day. Every Monday becomes a day to dread and Friday cannot come too soon.

So today I found a real example for you to think about from the Lessons Learned column in Business Investors Daily, Monday, April 30, 2012. A serial entrepreneur says it like it is, in this, his story:

 EXAMPLE

A Tech Entrepreneur Hires People Who Fit The Culture

By MOREY STETTNER Posted 04/27/2012 03:39 PM ET

Entrepreneurs often dream of building a business and selling it for a fortune. Tony Hsieh lived the dream, but it didn't unfold as planned.

Within a year after graduating Harvard in 1995, he co-founded a Web advertising firm called LinkExchange. With Hsieh as chief executive, the startup grew quickly and attracted a large following. In 1998, Microsoft bought LinkExchange for $265 million.

"The real reason we sold the company, which most people don't know, is it was not a fun place to work anymore," said Hsieh, now chief executive of Zappos.com, an online retailer based in Henderson, Nev. "The company culture went downhill. I dreaded getting out of bed to go to my own company."

An early investor in Zappos.com, Hsieh joined the fledgling firm in 2000 as co-CEO. After nearly a decade of fast growth, Hsieh and his team sold the company to Amazon.com (AMZN) for about $1.2 billion.

Unlike his earlier experience selling LinkExchange, Hsieh pursued the Amazon deal with an eye toward preserving the vibrant culture that he and his colleagues had worked to create. The culture remains intact post-acquisition.

Reflecting on his LinkExchange experience, Hsieh admits that he overlooked the importance of fostering esprit de corps as the startup rapidly hit its stride. Managers recruited candidates with technical qualifications but who lacked the right "fun" personality.

"The culture was great at first when we hired friends and friends of friends," recalled Hsieh, author of "Delivering Happiness." "But once we exceeded 15 or 20 people and we had to hire people through resumes and interviews, things changed."

Newcomers didn't necessarily share the same attitudes as the core group who launched the company. Morale started to suffer.

"I should have been more careful about company culture and made sure everyone understood it can go away at the drop of a hat," Hsieh said. "It's easy to take for granted, but over time there's death by 1,000 paper cuts."

At Zappos.com, Hsieh vowed not to repeat his mistake. He says that maintaining the right culture "is the No. 1 priority of the company," and he hires people who embody the organization's values.

Candidates undergo two sets of interviews: one with a manager who assesses their technical prowess and one with a human-resources representative who evaluates cultural fit. Zappos.com has about 4,700 employees. In 2011, the firm hired approximately 1% of its 25,000 job applicants, Hsieh says.

"As long as we hire people whose personal values match our corporate values, you don't need to tell them how to behave," Hsieh added. "They can just be themselves."

BOTTOM LINE: Founder CEOs who want to build great startups will spend huge efforts to build great company cultures. Serial entrepreneurs make that one of their top priorities. They will not hire people who don't fit the company culture, regardless of how smart and talented the candidate is. When you live by that policy, your startup will grow with extra strength, speed and efficiency. Life will be worth living, not hellish. It is part of what makes serial entrepreneurs so successful, it is key to their building an unfair competitive advantage. Learn that and your startup will increase its likelihood of joining their successes.

I wish you The Best on your Adventure!

SPONTANEOUS STARTUPS (PART 3): Pivot - Iterate - Spin - Loop whatever you call it, just "Be First to Get it Right"

I've been fascinated with the buzz around the "pivot" word.

It has captured a lot of attention and stimulated much discussion. Even the Wall Street Journal writes about it.

The word means to do something, to take an action (that's a verb). Action is good, that's what "execution of your plan" requires.

Others use words like "iterante" or "spin" or "loop". To me, they are all about the same action.

Yet I find little discussion about "What is the objective of pivoting a startup?" The purpose for doing something should be part of the action. So just what is the objective for pivoting a startup?

I suggest you'll find the Prime Objective (for pivoting a startup) is this: "Be First To Get It Right".

All the pivoting in the world is useless unless you end up in a strong competitive position. The best position is to emerge from all the dizzying pivoting and arrive at one point: Be First To Get It Right.

Facebook, Zynga, Starbucks, Qualcom and Chipotle are some examples whose founders pivoted and became First To Get It Right.

Arivving at that position opens the door to the Prime Goal: Become the Gorilla of a New Space within 5 Years of Launch. When you attain that Prime Goal, you have succeeded with your startup. Everything that follows is easy.

BOTTOM LINE: The Prime Objective of pivoting is Be First To Get It Right. The Prime Goal of pivoting is to Become the Gorilla of a New Space within 5 Years of Launch. That is what all the commotion is about. It is central to building an unfair competitive advantage. You can do it.

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!

SPONTANEOUS STARTUPS: They just happen (and often do, well)

Spontaneous Startups are a special class of new enterprise.

They are the ones that just happen.

One or two people. No business plan, no MBA, no VC money, no whatever else, just that sudden "Hey, why don't we do XYZ?!" And they go do it. Often very well.

I've recently realized there are a lot of amazing entrepreneurs out there who "didn't have a clue" about what they were getting into. Something triggered in their brain one day and presto! Out came a clever idea that became a clever new enteprise.

They are so fresh and different from the classical venture capital backed startup to IPO model that I had to pause and dwell upon them. Like a breath of fresh Spring air, I found them stimulating and inspiring.

My research has revealed so many of these Spontaneous Startups that I decided today to reflect on them for you and supply a real example to think about.

SPONTANEOUS STARTUP IS

Here is what makes a Spontaneous Startup so special:

• Sudden. There is no gradual effort leading up to the formation of The Idea for the new enterprise. It springs up with a loud "Surprise!"
• Wherever. The Idea can occur anywhere. On a plane, in a classroom or shower, watching television, during a sporting event, even on the job as you work.
• Instantly compelling. The Idea is immediately appealing to the founders who sense it is will also be appealing to many paying customers.
• Personal Product/Service. Sports clothing, baby seats, racing bicycle parts, casual digital games and other ideas resonate naturally with the founders.
• Mostly consumer. Industrial startups can be born as Spontaneous Startups, but most are ideas about selling something to ordinary people (or they are about supplying a product/service free to end users and making money via the classical Internet advertising business model).
• Clever. Something is triggered that jumps out as at least novel, or very new, if not extraordinary.
• No Special Education. While founders of this kind of startup range from high school dropouts to PhDs, the founders appear to include relatively high portion of people with no college education.
• Venture Capital Missing. Founders got started with their own savings, typically in the form of going without salary. They begin work in their homes and rented apartments. Cash is precious.
• Quick Time to Launch First Product. Months rather than years are consumed to get from start to first sales.
• Quick to Profit, Mostly. Most are profitable after a few months of first sales. Exceptions are in Internet centric businesses (e.g. mobile photo sharing: Instagram) which race to be first to get the gorilla share of end users in the new market category.
• Hyper Growth, Mostly. The first product/service catches on and spreads like wildfire, with sales following with the same remarkable growth. Exceptions like Linkedin do seem to require decades to get established before the hyper growth occurs, and thus have to get additional funding from wealthy angels.
• Friends Do It. The founders and early core of employees are friends. They may have worked together, but more are simply social friends, often very close friends.

 EXAMPLE OF A REAL SPONTANEOUS STARTUP

I have a real Spontaneous Startup for you to think about. It was born in Norway and is thriving. It is Onepiece.

Here is their story, from the startup's spontaneous beginning.

Early one Sunday morning in 2007, Henrik, Knut and Thomas, three Norwegians in their twenties, fantasized about the ultimate chill-out wear that would be perfect for a lazy day at home.

They all agreed on the merits of the sweatsuit for recovering from a night on the town. "But without the tight waistband and the pressure to go jogging," Thomas said. Knut had been staring at a light bulb when, eureka, it all became clear:
"Why not sew together a hooded sweatshirt and a pair of sweatpants? Let's make it so big that no one in their right mind would think of working out."
"If we can skip the waistband, I'm all for it," said Thomas. "But how are we going to get into it?"
"No sweat," replied Henrik, "we'll just put in a big zipper."

And with that the OnePiece Jump In was born. The three friends dropped everything and invested all their savings to realize an idea they believed was unique and brilliant. They made the loose-fitting, all-in-one hooded sweatsuits in soft, thick cotton fleece in a wide variety of colours and patterns.

For two years they sold the OnePiece to friends and marketed it to high-school seniors in Norway. Then, in autumn 2009, some bloggers wrote about how much they loved the OnePiece, which triggered other bloggers to rant about how much they hated it. Fuelled by massive debate in social media, the OnePiece Jump in became a huge trend in Scandinavia in 2010, and is now catching on in England and other European countries.

"We were as surprised as anyone when people started wearing the OnePiece at clubs and it became a fashion and lifestyle statement," says Thomas, who has left university to devote all his time and energy to the OnePiece. "I think that the versatility of our jumpsuit and the fact that it is extremely comfortable are the main reasons for its success."

Even as the OnePiece wave hits country after country, gaining a foothold, Knut, Thomas and Henrik are busy developing new ideas and concepts. To be sure, the OnePiece won't be their last innovative fashion item.

BOTTOM LINE: The class of new enterprise known as Spontaneous Startup is large and filled with exciting fresh business ideas. This kind of startup is able to be created by nearly anyone. The specialness of a Spontaneous Startup opens doors for many budding entrepreneurs looking for a way to do a real startup. The ones that succeed seem to be intuitively able to build unfair competitive advantages (which says a lot about the intuitive brains of the founders of this class of startup). Think about a Spontaneous Startup for your own new enterprise. It may be just what you are looking for.

I wish you The Best on your Adventure!

TWIST YOUR STARTUP IDEA UNTIL IT SOLVES A BIG PROBLEM: "Better" is living death

This past week I was working with teams of four or five techies in my startup Entrepreneurship class at Cornell University.

What struck me was how tricky it is to get techies to see the difference between "better" and "BIG".

Great startups find BIG problems to solve.

Companies that get started and go sideways focus on making something BETTER.

Words ending in "er" are four letter words to VCs and experienced startup employees: faster, better, cheaper are not firing up their eagerness to join your new enterprise.

The founders who focus on solving a basic problem that ails a huge number of people produce the great startups. That takes courage and conviction, confidence and determination. There is a lot of emotion in making that decision.

To test your idea, ask yourself "Has this been done before?" Then ask "What that is similar has been done before?" Great ideas for startups find that idea is fresh, new, has not been done before. And the similar solutions are old generations of clunky solutions. You want to move from a ho-hum idea on to one that is very exciting, that has a lot of "WOW!" in it.

TWIST YOUR IDEA : 

Use your first idea to begin a process of altering it week after week, twisting it into different forms that solve different problems. That twisting process will advance your initial idea, most likely shifting it to focus on a very different problem to solve. That is what serial entrepreneurs are terrific at doing.

EXAMPLE:

Here is an example for you to think about: "Build a better game" is not going to lead your startup to greatness. But as you ponder building new games, you realize there is big decision you have to make: On what devices (computers, game boxes, smartphones, pads) should your game run on? It is a lot of work to make a game run on one operating system and one device. How about a dozen in various combinations? Now that is a BIG problem needing a solution.

So how about creating a language that can be used to build one game that works on the many different devices?

Sounds great!

But hard to do (good barrier to competitors).

That is Exciting!

And yes, there is a startup that is focused on doing just what I have mentioned. It is Game Closure. The company has built HTML5. It is a set of standards that lets Web browsers understand animations, videos, graphics, and other multimedia content without the need to download a plug-in like Adobe's Flash.

You can imagine how you might have come up with this idea yourself: as a game developer you grew frustrated at the basic problem of cross platform game playing software coding. You set out to solve it with a couple of ways, tried a few in the lab, kept on thinking and twisting your idea, and then "presto!" you get the idea that we have just discussed.

That is how to move from an initial idea to a great idea. Twist your first idea round and round until it transforms into a solution for a really BIG problem.

That is how you attract the great people and great financial backers.

BOTTOM LINE: Beginning with your initial idea, start twisting it and keep on going until it becomes -- in its transformed shape -- a solution to a BIG problem. That will be the foundation for building an unfair competitive advantage. It is how serial entrepreneurs do it. So can you.

I wish you The Best on your Adventure!

SHOULD YOU JOIN A STARTUP NOT YET TO IPO?

"Should I join a startup that is three or more years away from IPO? It is selling its first products, growing quickly and wants me to help open a new market for the startup."

That's essentially the question I addressed yesterday with a business development specialist.

What we talked about can help you make a wise decision when you are faced with such a career decision:

• How large are the odds that this startup can emerge before IPO as the Gorilla of a new space? We dug into the market, competition, and what the company's unfair advantage was composed of. The Conclusion: This startup has what it takes to become First To Get It Right in a New Market Category.
  .
• Is the core team ("top management) able to lead the startup through the next growth phase and get it IPO ready? We dug into the LinkedIn and other readily available material, Googling and reading about each person. The Conclusion: This core team has deep and successful prior experience with high technology product breakthroughs, building new businesses and startups.
  
  
• Are the investors of high quality? This was simple, the About web page touted the names of the VCs and Partners. I knew the firms and of their reputations. The Conclusion: The money comes from among the world's most respected venture firms.
  
  
• Is the cash in the bank sufficient for several years before requiring another VC round? Again this was easy to find on VentureBeat and other Googled sources. The B Round had been completed less than six months ago for a tens of millions of dollars financing. However we still needed to know the burn rate (use of cash per month) to know how long that huge financing would last (the company must build its own factory in order to produce its products with its new proprietary technology). The Conclusion: The cash in the bank is probably good for at least two years, but in the next interviews the candidate will inquire more about this issue. The reason for the sensitivity with this matter is because this candidate has been asked to start opening a new market for the products, one that has a very large order per customer and takes years to close on a deal (currently the startup is selling a lot of high volume, lower priced products to retail product producers).
  
  
• How supportive of your challenging assignment is your boss and his/her boss? We reviewed the reporting ladder, discussed responses about this issue (after his first round of interviews), and speculated on what each of the bosses would want/expect of the candidate. The Conclusion: The right people want very much to have the doors opened for the startup to enter this new market.
  
  
• Is the level of job risk for the candidate reasonable? The candidate explained his contemplation of this issue, what he would be leaving behind (compensation, stock, track record, employer relations, etc.). And his answers to my questions told me he had a reasonbly realistic grasp of the risk he would be taking by terminating a fine employer and moving on to a much more relatively higher risk startup. The Conclusion: The candidate had his head out of the clouds and had removed his rosy glasses, leaving him with a clear understanding of what he was seriously about to do with his career.
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• Are your dreams of freedom and creativity and joy-filled-living realistic? In this discussion this issue was premature. But it is very important to test before making your decision. Too often escaping from a job and joining a startup is like jumping out of the frying pan and into the fire. Be realistic: startups are a lot of chaos and hard work. And not all founding CEOs are angelic, or what you need to thrive in the new job. The startup's culture may be right for some but hell for you.

There are a lot more questions we discussed, including compenation (cash and stock options), but the above are more important to be sure about.

BOTTOM LINE: Be deliberate about your decision to join a startup. Then you have a chance to make the Big Leap with your eyes open. And remember that the startup you are going to join will look to you to add something important to help the new enterprise build its unfair 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!

WINNING STARTUPS MORPH FROM FIRST IDEA TO WIN: Consider the example of Jennifer Dulski and The Dealmap

Winning startups cross the finish line looking very different than what their founders imagined on Day One.

I have found the histories of famous (and lesser-known) enterprises support that finding.

• Facebook moved from males ogling local college women to the global social networking gorilla.
• Google morphed from search engine to on-line advertising behemoth.
• Intel climbed the value added ladder from individual transistors to integrated circuits to complex microprocessors.
• Think how different Apple has become from its first personal computer days.

What started out ends up very different.

That's a characteristic of startups that serial entrepreneurs quickly learn.

EXAMPLE

Last week I listened to an impressive founder whose hard work and wise decisions led to some recent significant success. I've had the privilege of watching her leadership in action over several years and have concluded that the company's history also maps the above startup characteristic.

I was attending a Cornell Entreprenerial Network event in Silicon Valley and on the discussion panel was the founder and CEO of The Dealmap, Jennifer Dulski. She recently sold her startup, The Dealmap, to Google. 

Her success is the story of a determined and very able first-time founder CEO who began with an idea for a new enterprise and ended up with a very different -- and winning -- business. She showed that it is not too difficult to get started, but it definitely is difficult to grow an idea quickly into a very large enterprise.

The process she followed I label a "startup morphing". She began with Business 1, launched it, watched it grow, assessed its future and decided to significantly alter that idea into what became Business 2. (Bear with me as I make my point with these simplified examples -- leading real startups is both complex and very difficult).

Business 2 was launched a short time thereafter and like its predecessor, was modest in its appeal to users, yet also was growing and moderately popular. So Jennifer made another decision, to morph from lessons learned and launch Business 3. That one became The Dealmap (now owned by Google).

All this took place in less than four years. Fast, yes indeed. Successful, right again. Different than the first idea, you bet!

That is how it is done.

And it is being done right now all around this planet. (I just got an email from a serial entrepreneur I've been following: "We've gone viral!") That's Business Number 3 for him.

BOTTOM LINE: So that's how it's done in the real world of real startups. The first idea is just the starting idea. What you end up winning with is going to be very different than what you began with. Veterans of new enterprises make on-the-fly changes, morphing from change to change until they have The Great Thing that propells the lastest version to greatness (It's got "WOW!"). That startup morphing is a special skill they use to build their unfair advantage. When you can do that, you'll stand out from the herd competing for employees, venture capital and customers.

I wish you The Best on your Adventure!

NEXT GENERATION STARTUPS: Use combinations to rise to the higher level

"We were thinking about using data on restaurants and parking to help diners have a more enjoyable dining experience. What do you think about that idea?"

This question opened a session with a first-time startup team yesterday evening (from my Cornell University class). From then on it was an intense workshop addressing the question "What can you make from this initial idea that can move it forward so it becomes a great idea for a great business?"

Most startups begin that way (vague, weak first idea) and the founders have the determination and intuition that drives them to start changing the first idea so it becomes something much more compelling ("cool") to a vast majority of end users and customers ("scaleable").

But that is not easy. Yet serial entrepreneurs can do it swiftly and very effectively.

So let's get you to understand the process the veterans use to lift their first idea up to "the next level".

DIALOGUE:

• "We are going to use data to help diners know how long the wait time is before getting a table and help them find a parking space. We see our expertise being in allocation of scarcity."
• Q: You must focus on either helping a restaurant or a the dining person. Which do you want:
  • A: Let's focus on helping the restaurants.
• Q: What is The Big Problem you are going to solve for restaurants?
  • A: Diners not frustrated.
• Q: Isn't that a non-problem for restaurants that are constantly selling all the seats every dining time?
  • A: Yes, well, then we have to help the other restaurants, the not-full places.
• Q: How could you help the underperforming restaurants fill more seats?
  • We could use their customer data to email and advertise to their Ideal Customers.
• Q: How about using operations research technology to analyse the patterns of booking reservations (like hotels do), predict the outcome (unless action is taken), and send out email alerts (to smart phones, PCs, pads) that a bargin (e.g. for next Tuesday Lunch is a 2:1 free desert)or other discount/coupon)?
  • A: Cool, and we could help them find the place on a map!
• Q: What could you do for people visiting a resort area and looking at the last minute for a place for dinner?
  • A: We could use location based technology to alert their quiries of Google Maps about local restaurants are nearby. Instant find, instant (automated) booking, walk in to your seats!
• Q: What could you do for a hockey game fan?
  • A: Well we could reserve a parking space, give Best Driving directions, and maybe suggest near-by restaurants!
• Q: Anything else for the sports fan?
  • A: We could offer near-by lodging and maybe discounts booked through us!

And so on the discussion went.

Notice how the movement went to using existing technologies to build a more focused, more compelling service.

The end result was a combination of Google + FourSquare + Open Table + Groupon. It was very different than the initial idea.

BOTTOM LINE: Serial entrepreneurs move swiftly from initial idea ("dream", "vision") to focus, add value, increase complexity and emerge with a loud "WOW!" idea for the new enterprise. Combinations of existing business models, technologies and marketing methods transform a weak first idea into a more powerful one. As more work is done (in secret), the idea grows more and more powerful. The serial entrepreneur does not stop until he has a plan that he is confident can be executed to deliver a powerful unfair competitive advantage. When you can do that with an idea, you'll have advanced into the halls of those few who can become serial entrepreneurs. It is worth the hard work and brain straining.

I wish you The Best on your Adventure!