Chasing the Whale

The allure of the big catch, the promise of the exponential growth that will happen if you can reel in the big relationship and the inevitable starvation of a business that does not bring in food to keep themselves running while working on the big opportunities.

There has to be a balance. Every entrepreneur knows that hauling in the 80 pound Marlin would be huge for their business and most entrepreneur's can at least get in the door, or on the boat. The problem arises when they take an all or none approach to business.

Having small successes will get the attention of the larger relationships, not to mention that when you give them your pitch the first thing they will ask is "who are you doing this with now?". If the answer is no one, there will be no deal because they will not be the test dummy.

In every sales, business development and product meeting I repeat the same question "what can we control?" Where is your business able to have the most control over the outcome? The more control you have to give up to get something done the less likely it is to happen.

When deciding which paths to pursue for short term gains with long term value I put the options into a matrix to compare the following;

• Time and resource commitment required to bring the opportunity to a close
• Projected time to close
• Short term revenue potential
• Long term revenue potential
• Sector revenue and growth potential
• Long term value of relationship with principals
• Strength of successful use case for new opportunities

Taking an extra week to make a decision will rarely kill the deal, but making the wrong decision could kill your business. Take your time, make the best choice based upon the information that you have and execute!

Great Idea vs. Great Business

What is the difference between a great idea and a great business? Execution, Execution, Execution. So what exactly does that mean? There are a lot of very smart entrepreneurs that execute their butts off and still fail. They fail because execution is about more than pointing your finger and running. I wrote execution three times for a reason. There are three key components of successful execution.

1. TEAM, Team is capitalized because a one man business is destined for failure. Surround yourself with people who will challenge you, not people who are along for the ride. Challenge each other to make the best decision that takes into account the trends in the marketplace, your financial position and staffing resources and the upside potential, most likely outcome and worst case scenario of any decision.
2. Timing, Set milestones based upon metrics, not intangible goals such as "we have someone using our product". How many do you need? What do they need to do? What metrics decide success, failure and adjustment? The window is limited, the market is moving and there are 1,000 other businesses that are working on the same thing you are... so you need to move, measure and adjust quickly... which leads into # 3.
3. Agility, It is important to be agile as a new business, and I mean that in all senses of the word. Don't be tied down to a specific service, target market or even location. Sometimes market factors can make something that was a great idea 6 months ago a one way trip to the dead pool... think recession. So be tied to a mission and execute on that mission. How you execute on that should be fluid. As an example, your mission may be to make it easier for consumers to manage their personal finances and lower their bills. Just in case you live under a rock a company called Mint just got bought for $170 million because they delivered on this mission.

Many entrepreneurs have dreams of being the next Marc Cuban, Zuckerberg or Trump... You know what I've found as the common factor in successful entrepreneurs, they were driven by providing something different and valuable that served a real need, they worked very hard to make their business successful and grew over time with the market, instead of trying to change it.

So to all my fellow entrepreneurs out there...

Be confident!
Be open minded!
Be focused!

Making a Decision

There are thousands of resources and experts that provide guidance on the right way to make decisions for a business. Each expert has an opinion about the process that needs to be followed for effective decision making. What I find lacking in most of the reviews is the mention of the unique set of factors for each decision.

Are there time pressures? Financial pressures that shouldn't impact the business, but impact individuals making the decisions? Is the market moving and the business model changing? Does the CEO want more time with his or her family?

Business decisions are never easy, that is why the people who are responsible for the tough decisions get paid the big bucks, because their neck is the one on the chopping block. Hero or villain, there really isn't an option for an in between.

One of the greatest examples of making a tough decision is Advanta. They decided to get out of the small business credit card business. That is their business, not part of their business, but their core business. They recognized that there was a greater risk of sitting in the back seat and crossing their fingers than mitigating their losses, retaining some assets and starting over.

I remember what a trusted professional and friend once said when I asked about a business that was on a roller coaster. "Sometimes the best decision that you can make is to walk away". To give him credit, his name is Gil Beyda. His simple, yet powerful message was that you can't force things. You have to take the information in front of you and make the best decision possible. Walking away from a business, an ideology, a product, employee, geography... we have to make decisions every day that create a feeling of loss. It is very hard to walk away when so much time, energy, sweat and money has been committed. But what is a worse outcome? Cutting your losses or incurring more? More stress, more money, more time... more missed opportunities.

The key to sound decision making is finding the right balance between planning, timing and objectives.
What are your short term and long term goals?
What are the potential outcomes that are unacceptable?
What are the potential outcomes that are most desired?
What are the time, monetary, quality of life and missed opportunity costs associated with each option?
What is the best, worst and most likely outcome for each option?
With whom can you surround yourself to ensure a timely, well-informed decision?
Remember that good decisions are NEVER MADE ON AN ISLAND!!! Sorry to yell, but you don't know it all...none of us do. The truly wise gain wisdom from others with different experiences, insights and outlooks.

So,
1. Create a simple matrix in excel
2. Weigh the benefits and risks
3. Make the best decision possible
4. Track the progress
5. Measure the results
6. Prepare to adjust along the way

Read and React

That phrase was repeated dozens of times a day at practice. Know your initial responsibility, go through your initial read and react.

I bet there are a lot of smart young entrepreneur's that wish it was this simple. Well guys and girls, it really is. Don't focus on what you can't control and don't build a business based upon the "ifs", like "if we get this distribution deal", or "if we can raise $1 million". Know your objectives, define responsbilities, read and react. Let's break that down into basic steps.

• Objectives: What does your business or product do? Keep it simple. Your business or product may be able to do 100 things but at the core it does 1 thing, solves 1 problem...
• Responsibilities: What needs to be done to launch the business and start getting customers? Don't think about acquisition, think about revenues... that means what needs to and can be done today.
• Read: What is the market telling you about your service? Don't push the shirt you want to sell, sell the shirt they want to buy.
• React: Adjust to the market demand

I get it... It is easy to get pulled in many directions by people who you think will invest in you, get you that distribution deal you need to grow your business... etc... but the truth is their vision isn't necessarily what's best for you, it's what's best for them. If someone shows interest they have motives. Their motives could simply be that they believe in you and want to drive a high return for their LP's, but there are motives.

As a CEO, even a young one, it is up to you to be the coach. You must motivate people when they are down, kick people in the butt or out the door when they are not delivering and make sure that everyone is on board with your vision because a company only succeeds when a team is working in unison to achieve a common goal.

The reason that businesses fail is mainly because of the leadership. They mismanage funds, try to operate a yacht with a two man crew or bury their head in the sand and let the market pass over them.

You have been in the league for 2 years. The first string quarterback goes down and it's now your shot. What will you do? What type of leader will you be? Will you become one of the greatest to ever play the game, or dissapear into obscurity?

Remembering 9/11

Too often we forget about tragedies very soon after they occur. We apologize for our wrong doings, have a personal need to be a better person and then put this memory away and move on.

Remember the people who live and die for our way of life every day. Remember those who gave their life without choice. Remember to be someone you can be proud of today, just in case tomorrow never comes.

Hyperlocal, Fancy Phrase or the Future of Consumer Engagement

Since I can remember "Cracking Hyperlocal" has been the goal of every application, marketing company and venture investor. With so much attention to the space why hasn't anyone cracked it yet? Is it because we were waiting for the iPhone?

Radio, TV and newsprint have been targeting consumers down to the household for years. So what were they missing? The ability to target ads to individual consumers and not just area-based demographics, the content to create real neighborhood based value to consumers or the ability to reach them at a specific point in time; like with a dominoes pizza commercial during a football game.

The challenge, in my opinion, has less to do with the ability to reach the consumers and more with the ability to monetize the content most valuable to consumers. We are creatures of habit. We tend to walk the same route everyday, eat and drink at the same places, buy our favorite brand of jeans, go to see the same band every year and look for a certain level of convenience that matches our busy or lazy lifestyle.

So what do I do today when I want to know what new micro brew specials are featured at my favorite local pub, when my favorite artist is coming into town or when my favorite brand of jeans are on sale?... and on sale at a store I can walk to... Honestly, I don't do anything because I have no idea where to start or look. I could search google, maybe check yelp, go to Ticketmaster or the band's page or just call my favorite pub and ask... but I won't. You know what I will do, nothing. I won't even think about it. I will move on to the next email I need to send, Facebook status update I want to make or text my mother so she knows her son hasn't dropped off the face of the earth. Getting this type of information could drive me to make a purchase today, but I won't actively look for these types of deals. Not because they aren't important to me but the time it may take to get to the information I want isn't worth it.

When was the last time you visited a local newspaper website or even one of the 300 local event listing sites only to find the same bar, promoting the same happy hour for the 3000th week in a row... or even better nothing for the area you live in. These local media channels are constrained by their operating budgets. They list the venues and events with the real budgets. That means that all of the other information that you really want is ignored.

In other words, consumers are not in control. That is why no one has cracked hyperlocal. The content we receive is created and distributed by some product developer or sales guy who has no idea what local consumers in fairmount, the east village, south bay or the triangle really want. They have no idea because it is impossible to build a one-size-fits-all solution for a need that is individual to every consumer in the world.

So if no two consumers want the exact same content experience, how can any company provide a solution that fills the consumers highly personalized needs and generates the revenues needed to support the business?

It's not through IPhone applications...
It's not through complex technologies...
It's not through data feeds...

It is through the user experience. So what's the magic user experience? Well, that wouldn't be any fun.

Investments are NOT REVENUES

How many times have we seen a company go under because they run out of money? Where did the money go? The product was 99.9% built, they didn't spend $2 million on marketing and advertising... so where did the money go?

It went to salaries. Salaries for individuals who feel like they deserve $200k a year because they got funding.

I have seen so many sets of financials that look like they were developed in 6th grade math class. CEO's who don't know the first thing about operating a company and unrealistic revenue projections that estimate cash flow positive in 6 months when the current burn is $150k/month and the current revenues are $3,500/month.

Operate a business as if you have $0 in the bank. Look for ways to reduce expenses and maximize revenues without compromising the short and long term goals. Think like a restaurant owner who wants to build a franchise. I have $15,000 in bills this month, how do I cover those bills. If they can't cover the bills and build a sustainable business the goal of having 100 franchisees nationwide is a pipe dream.

You want to impress the top minds in the industry from funds like ETF and FirstRound, start a business, don't pitch the next Google... and if they invest in you, treat their money as if you're mother mortgaged her house to fund your idea and protect it with your life!

The Walk of Shame

Every entrepreneur has thousands of ideas. Some we follow through on, most we toss aside as an interesting feature but not a real business. The ideas we do follow through on become our life for a period of time, often a long period. We develop an idea, build a plan and future around that idea and spend thousands of hours creating a business. So the business is up and running, but what if the market has changed and your idea or the current execution of your idea is no longer viable? What if you missed your window? The hardest thing for an entrepreneur to do is accept that they may have to start all over and go in a new direction or close shop. You nurture this idea from its' infancy, bring it to life and now you must watch it die a slow death. Even more challenging is that the market now shifts at the speed of light. What was a viable idea 3 months ago is not today due to a new technology, a major competitor or a shift in economic conditions. So how do you know when and if it is time to move on or close up? Well, here are a couple of basic questions I ask myself every week,

1. How have my business metrics changed over the last 3, 6, 12 and 18 months?
2. What new technologies are out, in use or in the pipeline that could significantly change value fulfillment in my marketplace?
3. Where is the puck moving?
4. Are there any solutions in the marketplace or on the way that could drop the revenue bottom out of my current business model?
5. How can the assets we have be leveraged in new ways to adjust to the changing marketplace?
6. What type of business shift does our balance sheet allow us to make?

In short, what is happening, how can you react and can you afford to react effectively. To be a successful entrepreneur you must combine the ability to adjust quickly with proper planning. Quick adjustments poorly researched can result in a one-way trip to the dead pool. A method for consistently analyzing your business, your market and your go-forward strategy will give you the best chance for success. Some last words of advice. NEVER make a decision based upon pride. RECOGNIZE when you are in a losing battle. REMEMBER that there is no shame in a business not succeeding. Learning from failures prepares you for success.