Successful & Tasteful

September 21, 2008

In the 1954 western “Vera Cruz”, when asked how their “wild west” trip was, Henry and Maximilian reply “successful but distasteful”. Successful but distasteful is what I call a business which succeeds on paper, but failed to get there in a fair play. By “fair play” I’m talking about any means that are moral and go hand in hand with customer satisfaction. Not “all is fair in business” in my humble opinion.

How to succeed distastefully? There are numerous ways:

  • 3rd parties: In software installation, taking advantage of users who click “next” without reading, and installing third party software on the poor customer’s own computer. Software they don’t need, never asked for, and will probably never use (and is usually some kind of spyware), but only installing it adds a cent to a couple of dollars to the original software vendor. This is how iMesh was saved from bankruptcy, and is widely used in P2P software (see comparison here).
  • Leeching: I use “leeching” for software that needs a computer genius to uninstall. For the past decade or so, the vast majority of computer users are non-geek people, and abusing that fact to wear them out of trying to uninstall your software is really distasteful. Google “~uninstall hotbar” and you’ll see what I’m talking about. IncrediMail’s success (and failure) is, in my eyes, as distasteful.
  • Conspiracies: Your website login information is usually saved in a cookie. No website can read that cookie unless their Internet address is the same as the original website’s. In order to read login information of another website, you have to partner with the other website and plant a “web bug” in your own. This way you can “steal” login information from your visitors and use it for the other website. “FaceBook Beacon” is a complete platform which allows conspirators to publish their site on Facebook under your profile. Google’s DoubleClick is based on the same mechanism.

So in short, you can succeed by hijacking users, tie them down or use their private information without them knowing about it. It’s an easy way to show a massive customer base and value your company based on that. But does this go hand in hand with user satsifaction? I’m not so sure.

Do you feel tasteful, punk?

Do you feel tasteful, punk?

So how can you be tasteful?

When thinking about your business model, first think what your customers want, and only then how to make money out of it. Put yourself, your parents and grandparents in the user chair. If you’re comfortable with them using your product, then it’s probably good enough.

Build a successful business, but in a tasteful play.

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Test Yourself: Are You A Manager Or An Entrepreneur?

June 12, 2008
 
Growing a flower or owning the land? Insights from corporate America.
“Do you want to be the manager who is brought to a large company and manages it, or will you be satisfied with just being the one who started the company?”

That was the answer I received from one of the MBA students in Chicago when I asked “if I’m an entrepreneur, will you recommend that I joined your MBA program?”.

I have recently returned from a study trip to the US. We’ve been to NYC, visiting companies like Goldman Sachs, Bear Stearns, hedge funds, and other corporate America firms (as well as Columbia Univesity). We then visited Chicago, going through a 3-day MBA workshop at the University of Chicago Graduate School of Business (GSB). The peak of the tour was a visit by Sam Zell, to whom we presented our ventures (I presented Altrena Internet Investing), received an interesting talk and eventually got to chat with him personally over dinner. I compiled a list of insights from that tour. Here’s one of them.

The biggest issue is the difference between being a manager and being an entrepreneur. Sure, a great entrepreneur who is uncapable of managing is not so great, or as Zell told us: “being an entrepreneur is not an excuse for being a lousy manager”, but it seems that there is a tradeoff between them when you want to master either. You can’t be professional in both.

I guess the best way to know if someone is this or that is according to the stage of the company they run. Entrepreneurs are there from day 1 (or a couple of months before that). They transform an idea into a business, create value from zero and in fact, realizing a dream. At some point, it’s time for the professional manager to kick in. You will see them leading companies that are already “established & mature” in some form or the other. The managers “run” what the entrepreneurs “started”. Entrepreneurs strive for market recognition, managers fight for a market share.

So what do you do to become a professional manager? You ace your MBA in one of the top ranked business schools in the United States, you join one of the leading financial or consultancy firms and push your career towards senior business management.

What do you do to become a professional entrepreneur? You start your own business, fail, then start another one (maybe study some business in between), fail, start another one, and so on.

Either goals require different personal qualities; while the manager has to be more strict and meticulous, making sure tasks are done on time for the interest of the bottom line, the entrepreneur has to be more visionary, charismatic and resilient to changes and downfalls. However, they both have to be bright, leaders, sharp, diligent and have the traits of the other at some level.

But it’s not only different people. It’s different worlds. While entrepreneurs try and grow the most conspicuous flower, either by finding a “unique flower formula” or by locating an isolated hill, so that people see it (and hopefully buy it), the financial world owns the land, the water and the fertilizers. One cannot live without the other.

As for me, I’m happy with being “just the one who started it”. The world of growing flowers is the only place where I can turn vision to reality, and enjoy creating.. anything.


One You is Enough. About Teaming Up.

April 29, 2008

What is a team? What is a “winning team”? Do I need one? How do I build one?

“The most important ingredient for a successful venture is a winning team” – everybody says that. Endless articles, books and blogs were written about it. But still, when you come up with “the idea”, teaming up is not exactly the first thing that comes to mind, but rather how to win as much fame and recognition (and money) as possible with as little sharing as possible. It’s your idea, so why share?

Think of a basketball player. A really good one. He comes to you, the investor, and says “I’m going to win the NBA playoffs by myself”. Even if he runs a demo for you, and you discover a very talented player, will you be investing in him? If he were Michael Jordan, then maybe, but still only with the condition that he forms a strong team.

The problem? We all think our idea is a “Michael Jordan”, and that after the money comes, the strongest team will join as an executive team which will then be very good in finding employees.

Newsflash! You don’t win with a Michael Jordan idea, you win with a Michael Jordan business. The chances of succeeding with a startup are already very low, so why make it impossible? Just as you don’t let time developing your idea, don’t let it hire your team. Put on your human skills belt, and go find yourself a team.

My own lessons on building a team. In future posts I’ll write what I’ve learnt about managing a team. Feel free to add yours:

  1. There is no ‘I’ in team, but there is an ‘I’ in teaming. Make sure you’re going to be happy within the team you build.
  2. Don’t search for another you. One you is enough.
  3. Think what kind of people you need. To do that, think of your venture as the customer, the investor and the business partner, not as the founder, and build the team structure from scratch. Only then put yourself in it. Now find the others.
  4. Write a SWOT analysis on yourself. This is crucial.
  5. Don’t go too far – unless you’re a financial services venture, you probably don’t need a CFO right now. Director of Asia operations may be too early as well.
  6. Give your candidates only the 30 seconds pitch. If they don’t fall in love at that moment and see the beauty of your idea – don’t take them.
  7. Don’t be cheap on equity: it’s better to take a smaller piece of a bigger pie than keeping your piece the largest of a smaller pie.
  8. Make sure all the expectations are on the table. You’re going to practically get married, in marriage where the divorce is the hardest.
  9. Make sure your vision is clear and that your candidates relate to it.
  10. Don’t get family and important friends on board. It can make ‘divorce’ even harder and more painful.
  11. These people are going to put their trust in you. If you’re not positively absolutely sure it’s the right person, do you both a favor and don’t take them on board.

And last, always remember that, like in marriage, you’ll have to compromise. Just make sure your compromises come hand in hand with your business and yourself.


An Advice On Advice

January 21, 2008

Who would you take advice from? Who will you give advice to, and what kind of advices would you give? I was thinking about this issue lately. When taking your startup to the next step, whatever step it may be, how do you know what the correct way is? I usually consult with friends. With many friends. The more friends I consult with, I find out that there are too many advices. Some are great, some will work for me too, but some will not. So who do I listen to?

My rule of thumb is: if you want to quit smoking, the worst thing to do is to take advice from someone who has never smoked. The better option is to ask someone who is currently smoking and failed to quit how to not do it. But the best is to ask someone who has quit smoking successfully. The key word here is successfully.

So if you want to do something:

  1. Find out what not to do by asking someone who failed to do that something.
  2. Ask someone who had done it successfully how he had done it.

Let’s say you want to take your startup to the next step, to a place you have never been to before. Surely you will ask for advice, and assuming you’re using the rule of thumb above and asking only relevant people, you will still probably end up with too many advices. So what do you do with them? Which one do you adopt? How do you handle different advices from different people?

Naturally there is no categorial answer to that, but I can only give an advice:

Avoid giving advices. Just tell your story and let the listener decide.

When you’re the listener, try getting the talker’s story and extract the advice by yourself.

And always remember: what worked for someone may fail for the other, as similar as the cases may be.


Entrepreneurial Polygamy

November 12, 2007

If you work on several venture ideas in parallel, is it like polygamy, where no venture gets enough attention? Or is it more like having several babies, which is normally valid?

If you’re like me, then part of your “curse” is that every now and then you find a brilliant idea, and after quick validations it seems that about every month you have a new promising solid venture idea to work on. The problem? “All covet all lose”.

When you’re expected to be “fully dedicated” to your venture it means that 100% of your free resources should be spent on your venture. Since you probably fell in love with your new venture, dedication will come naturally. But then comes another idea, and another one, and they’re all valid. Then what? If the “entrepreneurial characteristics” in you had driven you to start working on the first venture idea, then are they gone when a second idea pops up?

I found out that when a new opportunity comes and I don’t do anything about it, the bad feeling of missing out the opportunity is very similar when you’re not working on anything yet, and when you’re already working on something. So I invented a new concept: “entrepreneurial polygamy”, and here’s how it goes:

You take one venture to be your “baby”. The one you love the most. You spend 100% of your free resources on it. Then you give 25% of your remaining resources on another venture which you think is also very promising. Then half of that on another one, and so on, until you dedicate one breath a day on the last venture.

Entrepreneurial polygamy stops at the moment you define as the time when a crucial barrier one of your ventures passed (e.g., initial funding, media coverage, successful prototype, etc). Then that particular venture becomes your only venture, your one baby. This means entrepreneurial polygamy is made only for the pre-funding stages.

Downsides? Plenty:

  1. You actually lose the ability to live (I’m not even talking about “happily”) for that period
  2. You’re not REALLY dedicated to ANY venture, so you can’t really satisfy your part as a partner
  3. It’s like cheating on your partners

Upsides? Several:

  1. You shoot in all directions, so you have better chances to hit
  2. You become knowledgeable in various fields
  3. You satisfy your egoistic entrepreneurial needs

Bottom line is, entrepreneurial polygamy is a crazy concept. Then again, that’s the beauty of it. It scares me and attracts me.

So what do you think? Is working on several venture ideas in parallel like polygamy, where no venture gets enough attention? Or is it more like having several babies, which is normally valid?


Entrepre-what?!

November 6, 2007

a person who sets up a business or businesses, taking on financial risks in the hope of profit“. – Concise Oxford English Dictionary

“…is a person who operates a new enterprise or venture and assumes some accountability for the inherent risks“. – Wikipedia

one who organizes, manages, and assumes the risks of a business or enterprise“. – Merriem-Webster Dictionary

The definition of an entrepreneur is arguable, yet most of the definitions include the words “risk” and “manage” in some form. Many try to characterise the entrepreneur, and the common qualities are usually commitment, conceptual abilities, leadership, sense of urgency, tolerance of risk, creativity and others.

They can dispute forever, but in the meantime I’m allowing myself to categorize myself under that term. Although I’m still at the very beginning, in some aspects we all are.

My definition of an entrepreneur is One who is addicted to grabbing opportunities and making them happen.

That’s right, addiction. It’s that ticklish feeling on the tip of the fingers when a new opportunity arose. It’s when your schedule does not allow you to, but your body leaves you no choice but to make things happen. It’s that craving for grasping the ultimate answer to a 4,000 page question, even when you don’t know the language it’s written in. It’s the desire to “just do it”.

Addiction at its full scale makes you blind to the consequences, the risks, blind to yourself, your body and surroundings. Blind to your loved ones. You will do anything to fulfill your craving. So does entrepreneurship at its full scale. As for me, I’m trying to keep one eye open, because losing yourself in order to fulfill yourself is pointless.

Through this blog I’ll try and share some of my adventures and experiences, with hope that someone finds it interesting or at least amusing. If not, it’s just gonna be a nice bedtime story for the grand-kids. This gives me another idea! Selling custom-style booklets of your blogs! Hard cover books for business blogs, antique style soft-cover diaries of personal blogs, and so on. That could be a cool business, don’t you think?