Category: Entrepreneurship

All startups, funded or not, should start from day one with a scrappy mindset. Every penny needs to be conserved due to the many zigs and zags, and time, required to find success. That’s not to say every penny needs to saved to the detriment of proving a thesis, but rather, where logical, go the cheap and frugal route. Let’s look at some ways to be scrappy:

• Seek out office sub-leases to save 50% off the market rates as well as enjoy shorter lease terms — shorter leases are key because you don’t know how many employees you’ll need in two to three years
• Purchase used furniture from Goodwill, or look for a local company that is downsizing — most companies that are downsizing will give you furniture for free because they’ll have to pay to have it removed (no used furniture dealers are buying furniture in this market)
• Purchased refurbished laptops and monitors off TigerDirect.com or Craigslist — never buy them new, and purchase laptops instead of desktops so that employees have mobility
• Use a VoIP phone systems like Vocalocity or Cbeyond instead of a traditional analog line as they are considerably cheaper and much more feature rich

Here are a few things you should not skimp on: a good coffee machine, natural light/lighting, a location people want to come to, and the fastest Internet you can buy.

One more benefit of establishing the scrappy mindset at the beginning of the business is that this will continue to persist as the business grows. You want everyone to treat the company’s money as if it was their own money.

My advice to entrepreneurs: incorporate a scrappy mindset at time of incorporation and increase your chances of success.

Most technology entrepreneurs should talk to VCs, even if they  aren’t planning on raising money in the near term, or possibly ever. Why? Well, there are lots of reasons why. Let’s take a look at a few:

• Developing rapport with VCs now helps in the event you do decide to raise money in the future as the fundraising process can’t be rushed, and typically takes twice as long as expected
• VCs regularly encounter hundreds of businesses, thereby offering a sounding board, insight into trends, what’s working, and what’s not working
• VCs are generally well connected, offering introductions to prospects, partners, etc. which can be invaluable
• VCs ask the tough questions, forcing you to more critically analyze your business, and better understand key metrics

My recommendation is to reach out to VCs and start developing relationships, even if you don’t have current fundraising plans.

Mark Suster, serial entrepreneur turned VC, has one of my favorite blogs over at BothSidesOfTheTable.com where he talks about his experiences and shares insightful anecdotes. One aspect of the blog that is dissimilar from most startup blogs is that he provides much more tough love for entrepreneurs. What I mean by tough love is that many bloggers talk about how great entrepreneurship is, how people should try it, and frankly, all around glamorize it. Mark sets the record straight and offers some great color commentary. Let’s look at some tough love now:

• If you are trying to raise money, and haven’t quit your day job, you’re not confident enough in your own skills.
• A real entrepreneur would find a way to get a prototype built with no money. If you just keep talking about the idea, you don’t have what it takes.
• Most people should make sure they’ve done their learning before stepping out to do their earning.

I recommend you head on over and read Mark Suster’s blog.

As the new year is almost upon us, my family and friends bring up the ubiquitous New Year’s Resolutions as a good topic for conversation. After listening to some resolutions, it got me to thinking that these are a good proxy for what motivates people. Really, think about it, what motivates you?

The popular How to Make Wealth article by Paul Graham is a timely one in that it talks about startups and entrepreneurship, as well as clarifying that wealth is more about assets, which is different from money. I bring this up because a good number of people say they are motivated by money, but I don’t believe that’s usually the case. We’ve all heard the studies and articles that say money, as a motivation for employees, is lower priority when compared to things like purpose and recognition.

My question for the new year is this: what motivates you and how are you incorporating that into 2010?

One of the tactics I’m a fan of is putting together a one page outline as a basis for a conversation or partnership. The general idea is to just jot down ideas in a bulleted, outline format so that one or more parties are prepared for a discussion, and to use it as a basis for future discussions and accountability. Of course I use Google Docs, making it is easy for everyone to work from the same content and centralize changes.

Some benefits of the one page outline:

• Forces the people involved to think through ideas in advance of the conversation
• Easy to change and update — bullet points are more manageable when compared to paragraphs
• Requires everything to be less than a page making for a more focused conversation

One page outlines work for me and I recommend them.

I just started reading the book SuperFreakonomics today and at the beginning they talk about how the success of their first book, Freakonomics, has made finding material for their second book so much easier as readers bring ideas to them. The term cumulative advantage, in the economics profession, describes a situation where previous accomplishments result in seemingly unfair advantages for future situations. Immediately, this made me think of serial entrepreneurs with a win under their belt.

Some cumulative advantages for serial entrepreneurs include:

• Previously proven executives and employees to draw from (assuming non solicitation has expired)
• Relationships with partners and distributors
• Existing network of trusted vendors like legal and accounting
• Easier access to capital as investors are more apt to invest in entrepreneurs with a track record

I recommend working on relationships and expertise that result in building a personal cumulative advantage.