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Thursday, August 31, 2006

Birds of a feather flock together


"Birds of a feather flock together"


I am reading a book , "Maverick" by Ricardo Semler, makes for interesting reading..so I wont give the whole book away here but you should have aread of it, he talks about his company Semco and how he revolutionised the way they work and run the company it's a democracy...a couple of "take away points"...

travel policies, the last thing you want to be filling out is an extended travel claim..or have your guys spend the first morning back in the office filling out there claims line by line receipt by receipt ..If you can trust the guys / girls to travel half way around the world to represent the company, they you should be able to trust them to manage there spend on business trips..if you can't you have hired the wrong person...have guidelines so you can budget for travel but don't proscribe how much they can spend on coffee...I have see that in a policy...


The main "take away" that struck a note with me...was the "Birds of A Feather" syndrome...it is not stated using that phrase that’s my wrap around for it..But the analogy is still the same...people wanted to work for the company because it is a good place to work..not only because it was good working conditions…it was because the best people worked there..and a true professional always wants to work with the best…so build your team with the same birds of a feather….and you will not have a major problem in retaining the best talent , and you will see the bottom line improve through it..

Attila the Hun was a great leader, read some of the real history around the man, and you will see that he had realized the importance of leading the tribes from the front, never asking someone to do a task that you would not do your self…he never wasted the time/ effort of his best warriors he always tasked them with projects worthy of there capabilities and loyalty….

So to wrap up hire the best you can, build a team that is the envy of others and task them with immense tasks …and lead them from the front…

Slainte

Gordon

Wednesday, August 30, 2006

The Entrepreneur’s mind set





Where will it take you ?









The Entrepreneur’s mind set
I have had a few pets in my life, the most interesting have been, the Budgies and the Cat. The determination of the budgie is legendary, once they set there minds to a task and just doggedly work on something until they get it done. I have seen myself watching the budgie try and get something out the cage, usually something you think no way are you going to do that, and the next morning you find it lying on the floor.
The Cat has amazing curiosity, it gets its nose into everything, and it shows interest in the smallest of details, always investigating using all its senses. The cat can get in to trouble go places it shouldn’t sometimes, but I always admire its adventurous spirit and never flagging enthusiasm for the yet to be discovered.
The Entrepreneur’s mind set has to be a mix of both, determination and curiosity,
Determination to keep pushing when the others have said no that cannot be done.
Determination to keep driving forward even when the hurricane is nearly on you
Determination to keep making the correct choices for the company, no matter what impact it has on you personally
Determination to make the hard decisions
Curiosity to search out new markets where there is no market
Curiosity in the search for answers to difficult problems
Curiosity in the welfare of your teams
Curiosity and courage to keep going back in search of answers when you keep getting hurt
There are other traits that the entrepreneur needs to have but these are two of the import ones that help make a mediocre entrepreneur a great one.
When was the last time you talked with your customers? Or went back to the one that said no and asked again. When was the last time you were curious about how the facilities engineers are getting on?
Well I hope you have a great hump day…and get curious and determined to make a difference.

Slainte Gordon

Tuesday, August 29, 2006

Networking for Life


Networking for life




One of the key skills that anyone needs to develop but more so in the early stage company is the ability to network, no this can be online using one or two of the many online sites, I.e. linkedin, E-business, etc or real life networking events. This is a skill that needs to be learned, but some basic physical attributes need to be present , it is hard not impossible when you are shy to network...

Some key areas to help networking for real life meetings:

  • University Open days: This gives you the opportunity to talk to Academics and get to know what the latest research is going on also the ability to see the young academics who could be good hires for your company. I also find that the Universities have excellent facilities that you can avail yourself with at a far better cost than you would from a commercial lab.

  • Conferences and Exhibitions: This one is self explanatory , but I would add that you need to step out the box and attend other industry events as well, to cross pollinate your thinking

  • Training courses: You meet your peers or others with the same interest and can use these days as places to bounce your thinking and ideas

  • Restaurants, Pubs and Clubs: You find that” birds of a feather flock together” and that you get in areas of concentration of similar industries there will be natural tendencies for folk to group socially as well as in business

Keep your network active you never know when you may need to use if for assistance, and your networking is a two way process you have to “give to receive” or as the net workers say pay it forward. Your network can be your value it also can save your company, come and join me at one of my online networks and we can chat more..

Slainte

Gordon

Monday, August 28, 2006

Raising Capital for the start up


Raising Capital

Frustration is word to describe the experiences of thousands of entrepreneurs across the world who have tried to raise money for their businesses. Why are so many entrepreneurs having such negative experiences when they attempt to raise money for their businesses? It is not for lack of commitment from the entrepreneur and it most certainly is not for a lack of innovative ideas!

So, why is there so much frustration with raising money ? There are so many reasons that we would have no trouble writing a novel on the subject. We would start with "bank bashing" because that is a favourite among us high-tech entrepreneurs. Banks are financial demonic institutions that suck our money through service fees and only lend when we really don't need the money. Right? We could then move to the Govt. Sponsored Funds who constantly, year after year, fail to invest hundreds of millions of dollars because they can't find the "right" deals. Then there are the Venture Capital firms that don't return phone calls and never tell the poor entrepreneur the real reasons why they won't invest in his opportunity. And what about the ubiquitous angels that everyone talks about? Who are they? Where are they? Do they really exist? The final chapter of the novel would state that there is just no money for Investment for early stage technology businesses.

These negative comments all stem from a horde of experiences from the business community, and while the overall frustrations are quite justified, the statements are for the most part erroneous. Such pessimism is largely due to a lack of entrepreneurs' understanding of the investment community, thebanking business and ultimately, how to raise money in an imperfect system.

As a former owner/operator of a business, I suffered from this malady. I despised the banks, berating them for their risk aversion and their unwillingness to get on the technology investment bandwagon. I had little knowledge of the workings of the investment community or the banks. At the time I decided to raise money, I could not tell you the difference between a Labour Sponsored Fund or a Venture Capital company. I had no concept of what a convertible debenture was, nor did I know the difference between a Reverse Takeover (RTO) and an Initial Public Offering (IPO). Whether I am wiser as a result of my experiences may be debatable, but I am most certainly more knowledgeable.

When it comes to raising capital for our own businesses, too many of us just don't take the endeavour as seriously as we should. We are largely unprepared, uneducated and have unrealistic expectations. And, we think we can do it all ourselves.

Raising capital for a business requires an intense amount of preparation. Similarly, you need a business plan and a strategy to reach the objective and to reach the right investors. Assuming you are an expert in your current business and not in the raising of capital, you might be well advised to get a guide, also called a financial intermediary. If, however, you are unconvinced or adventuresome, do yourself a favour by conducting the necessary research first!

For starters, how many of you could name five venture capital companies ? Five and you are doing good, Assuming you can do this, can you now name any two of the companies in which they have invested? Now, do you know why they chose to invest in those specific companies? These are just some of the questions that you need to answer.

What type of financings are available and what type of financing could I use?

Just about everyone assumes that they need equity capital. This may or may not be true. Remember when all you have is a hammer, everything looks like a nail. There are at least a dozen standard ways to finance technology-based ventures. Which options are available to your particular situation and which options should you consider will dictate whom you ultimately approach for financing.

Who is investing and in what?

We tend to lump all companies that have money to invest into the Venture Capital barrel. The truth of the matter is that there are many different investment companies, each having their own investment criteria and many specializing in specific types of transactions. For example there are companies predicated upon Labour Sponsored Funds, Venture Capital Funds, Pension Funds, Mutual Funds, Community Sponsored Funds and Limited Partnership Funds. There are specialty investment banks, investment companies that focus on mergers and acquisitions, on factoring, on export sales financing, on purchase order financing and on commercial loans. We haven't even mentioned the brokerage firms and those organizations that specialize in Reverse Takeovers and Initial Public Offerings. The bottom line here is that if you don't know who is investing in what, then you aren't going to know who to approach with your business opportunity.

What is my opportunity worth to an investor and why?

Just about all of the business owners/ operators that I have met suffer to some degree from "entrepreneurial disease". While sometimes an affectionate term and more often not, it is used by the investment community to describe the entrepreneur that suffers from delusions of grandeur with respect to his business. A basic rule adhered to here will go.a long way. In 99% of the time your business is worth more to you than it is to any prospective investor. Remember he/she probably has fifty business plans on his desk to choose from. If you appear unrealistic or unreasonable, he won't give you the time of day.

What is the "deal" that I should expect from an investor?

The smart businessperson comes to the investor with an investment proposition and not just a business plan. They know the type of financing that is required, the terms under which they are most likely to receive the financing and the most appropriate exit strategy for the investor. Armed with this information, they are less likely to enter into a deal that they might regret later and are more likely to get the deal that they want. Unfortunately, most entrepreneurs don't do this.

With the proper preparation, your time raising money for your company can be well spent with a highly successful outcome. It doesn't have to be a frustrating experience and can be very rewarding!

Friday, August 25, 2006

Friday...at Work


... Today will be a short and sharp....Friday in a Venture Capital backed start up…

No foobar tables please


I always believe that you should make a Friday an early finishing day; there are a couple off good reasons:

  • It makes the Friday go faster and the teams are better motivated
  • You can always use the Friday as the day for “pub” meetings with the teams
  • If you have a project on that needs the team to work through weekend , you can always break the period with a pizza and coke session when they would normal stop…

I believe that you need to look after the teams working for you, it does not take much a lot of resource or time to reinforce the message that they are important members of the team they work for and the company as a whole and the ROI is a 10x.

The company runs well when you have a motivated work force, they are more likely to put in the extra effort required if they know they are not taken for granted. This has been one off the areas that the Japanese multi nationals have been struggling with in the last few years as there workforce wakes up to how they are managed compared to the more liberal western management techniques they are starting to rebel. I saw evidence off this even 15 years ago when I was working for NEC Semiconductors, and the older managers were starting to get concerned about the future of there business model.

"Take care off the workers and they will take care of you"

I hope you all have a good weekend

Slainte

Gordon

Thursday, August 24, 2006

Can't see the wood for the trees...



"Can't see the wood for the trees"












Well last night I did my 30mins on the orbital track...one think I have found since I started this job is that I have tanked on the weight and it needs to come off...when I was in the US it was a lot easier to keep healthy...It has been hard since I moved back here to Scotland..it wasn't so bad at first when I was trying to start our business with Callum...it was all go 24/7...meetings...conferences..investor pitches and roadshows…

I read a lot when I exercise…sometimes fiction… sometimes reports and business intelligence books…last night I spent the time planning today and what I needed to get done….I started a new Procurement manager yesterday so I need to spend so time with him…and we have a NPI to talk about with the Sales and Product managers…the one thing that did strike me was when was the last time you sat and thought about overall strategy and not just for the business but for myself, and my answer was not for a long time. There is a saying “you can’t see the wood for the trees” and that is a trap that many off us get into, we cannot see the big picture because we are putting out fires all the time.

The task off sitting back and looking at the big picture for yourself and the business is key to keeping balance to the work / play system, it is far to easy to become fully immersed in the work..and forget the play….I hear some of you saying that well I will have plenty of time to play later, I just need to get this company started ,profitable and an exit /IPO, you may not get the time. I always say to guys and I fail in it myself sometimes (like now) you spend a large part off your life working (9600 hrs a year for a light weight) so do something you are going to be happy doing.

When I look at companies for the Venture capitalists, and perform the operational due diligence, the question I always ask is why did you start your company, the answer to that question will give you all the information you need to make a call on wither the company will survive or not. I would say the same to someone interviewing with a start up, ask the question to the interviewer why did you join, or if it is the board why did they engage with this company, listen to the answers, you will know if you are meant to work with them.

Have a great day

Slainte

Gordon

Wednesday, August 23, 2006

Dealing with the People problems



"A happy workforce is a productive work force" JJ Lee UMO





Dealing with people problems


The composition of any early stage / VC funded company will have a mix of ability, attitude and ego, hopefully you have aligned some off these characteristics in the team through you initial recruitment, but everyone won’t be the same and you should make sure you don’t have the same type off folks on board the team.

The very nature that the company is Venture Capital funded makes the dynamics very different from your traditional organization, you have to do more with less, and you are continually in invention mode, not only for the product / service but also the day to day things that keep your company running.

I am never scared to hire someone better then myself, because I understand that I am not the worlds greatest at everything, every founder / company executive needs to understand this very early on during the open doors phase and plan for the future. It is common knowledge that the management team that starts a company will not be the one that takes the company to maturity, there are different skills involved in both teams, one is visionary and entrepreneurial the other bottom line focused.

The one thing that I find most difficult to understand in the founding teams is there inabilities to handle people and people situations. These will always come back and bite your bum if you do not deal with them upfront; there is a tendency to have the ostrich syndrome or they have a ”hit person” who takes care off the problems. I have seen this in to many organizations and seen the impact of the poor management result in a lot of closed doors. The founders need to be able to deal with people, all groups off people from the receptionist (fount of all knowledge), to the cleaner (fount of all gossip) , to the board and investors, and be able to tell someone they are wrong or to tell someone the are correct.

The company you have started is only as good as the weakest link, the weakest link will not stand up and tell you who they are, you need to find out and fix it, but it does not stop there, once one is fixed another will surface. The best thing a founder can do for his stake holders and share holders is communicate informally and show by example for the rest off the team , a strong and active man management policy that looks after and takes care off the employees, and that may mean letting someone go.

Keep the questions coming and I will see you class on Friday

Slainte

Gordon

Tuesday, August 22, 2006

Is there a time to give up


Great things are done under extreme pressure






"Is there a time to give up"

I have mixed views on the topic, someone asked me after a session with the boys, "don't you ever feel like giving up" he had overheard some of the conversation I had earlier with my engineering manager on the difficulties we had over the last year, nearly a complete re-design of the product and the qualification hurdles we have and that we still did not have a product fit for the market we were targeting. I said of course I do, who wouldn’t when you feel like you are peeling an onion and each time you peel a leaf back you find another “bad” one, another set of issues to tackle, but I said if we had stopped a year ago on the this we would not have developed the new software or the hardware, we wouldn’t have developed the new manufacturing processes and improved the yield, so there are times that giving up is not the correct answer, but there are times when you have to be honest to the stake and share holders that “this dog is not going hunting” for the market you invested in us for , but ( if you are luck and have positioned the company correctly) we can tackle this market which has a similar growth profile and you will still see a healthy exit. I must admit there are more “mongrels” out there than “hunting dogs”, and when you are leading a company you need to keep scoping out the future and adjusting the internal strategy, the key is to do this with thought causing an internal confusion about objectives and diluting the focus, but that is why you are paid the big bucks or should hire me.

So to answer the Question posed there are times when you should give up, but not until you have pushed every avenue you can to make it a success, great things are done, when people are under great pressure, ask you Grand parents or Great Grand parents.

Slainte

Gordon

Monday, August 21, 2006

Is all PR good PR


"Even when you do not think there is someone around you can never tell"




There used to be a saying that any PR was good PR, I think that was probably aimed at your everyday celebrities who need to have there name in the press at least once a month if they are going to stay a marketable product. As a commercial entity and especially emerging one that is not true, you need to be careful how you and your company is portrayed. I am not going to chat about marketing strategy and targeted advertisement, or product evangelism (Thanks Guy) it is a more stealth based PR that I want to explore.

I used to work for NEC semiconductors and spent a proportion of my decade plus in Japan working, one off the first things my senior manager did was give me a map which was marked off with a red pen and he said Employees of NEC should not be found in those areas marked in red and that was it, I understood the lesson of course being a hot blooded Celtic young man I made for the red marked areas on my first free evening.

The lesson I learned was that I was part of the company and through such I was walking PR for them. The same lesson applies today, we are all walking PR campaigns for the company we work for, every time we talk about our job or our place off work we promote our organization either positively or negatively. I am not saying we should write it into our terms and conditions of employment that we shall not besmirch the name of the company, but what we can do as founders and senior management is make the work place a place that people enjoy working there and take pride in working there.

I was on a study weekend with the OU, and there was a guy who worked with the local Health trust for a hospital and he talked about how they rewarded not only the employees but also the families of the employees. I have taken that to heart and looked at how we can reward the families off the employees as well, it means that your employee is more motivated and also the employee’s family which then spills over into the local community, and you get positive PR from more that just the employee but his whole family.

When you send your employees to conferences / exhibitions you should take sometime with them before they go and prepare them for the event, make sure they are up to date on your products or services, take this as an opportunity to send a message to the world at large through your employees. There is nothing more effective to distribute your message and get positive PR, is a band of employees spouting your message in there own words to there peers from other companies. There is the downside that you have a disgruntled employee who gives I some bad PR, but if you have enough good PR flowing then it will counter balance the bad.

An finally make sure you have a connection with the local / national press, develop the relationship with the connection and see how you can help him to do his job and in return he will help you.

Well its another Monday, did you wake up full of the joys or did you wake up thinking OH no I have to go back there today, if so make a change.

Friday, August 18, 2006

The Captain and Commander

"Afloat on the sea of Trade"



I have studied the old British sea captain’s the “Thomas Cochrane”, “Mochitsura Hashimoto”, “.J Angus Waters “ to name a cosmopolitan few, there were hundreds of these captains and commanders on the high seas plying there trade between countries, forging new trade routes between nations…these guys impress me..they were responsible for the boat “lock stock and barrel” …they choose how they would get there…planned the resources…managed the ships company…dealt with the local dignitaries…crafted trade treaties …fought battles, repaired and rebuilt boats on the other side off the world..and this was all done from a few hundred planks of wood..and 60+ yards of canvas and a few yards of rope....and these guys changed the world…some were animals…some were drunkards..but they were all participating in one of the great events of this worlds history..they were furthering trade..connecting people..shaping the way things would be done for hundreds off years to come…

Now some people say that you can car analogies to far..but there are a few things we could learn from these guys…

The founder / CEO is in charge you lead the company and give vision and direction.

You and the management team are responsible for the people you recruited and you have there future dreams and aspirations anchored to your company. I know they made a choice to join you, but you persuaded the best of them to join, and if you did not persuade the best to join with you, they are the wrong people to have on board with you.

You need to always be scoping the way ahead, has there been changes to the path forward, are there any government plans afoot which could adjust the market, our your business operations.

Have you good relationships with the local dignitaries? Have you made the effort to network?

When was the last time you rewarded the team you work with, broken open a keg and had a few laughs with them.

Do you see yourself forging new trade deals and executing on them?

And to finish with a quote from a great trader from the next millennium “ No7. Always keep your ears open” from the rules of acquisition.

Hope you have a good weekend

Slainte

Gordon

Wednesday, August 16, 2006

Working with partners


I can't tell you how many early stage companies I talk to tout their great list of partners. I always step back in amazement at how a small company can support more than one, really large partner in the beginning. In fact, I remember being in a meeting with a strategic partner once and having them tell me that we would break if they put their resources behind our product. You have to realize there are 2 kinds of partners - technology partners and real partners. In my mind, if you and your partner are not generating revenue for each other than it isn't a real partnership but rather just a Barney press release. Yeah, you know the "I love you, you love me" kind of partnership that sucks precious resources from a startup and yields no value and no customers.


So how do you make a real partnership work? In theory, it is very simple but requires a ton of hard work. Here are a few rules I like to use when working with partners.

Rule #1 - Don't rely on corporate; engage at the field level.
Many early stage companies try to create partnerships from the top down without recognizing that the real action is in the field. If you can bring your potential partner customers and lots of customers, you will get attention and be in a much better position to negotiate a real partnership.


Rule #2 - Focus, narrowly focus your opportunities.
Many of your potential partners are huge enterprises, and it is easy for a small company to get lost in the shuffle. Try choosing a group in the large organization (it depends on how the company is organized) where you can effect a real P&L and create a strong value proposition. In some companies that might mean focusing on a vertical like energy or financial services while in other companies it may mean picking a specific function like business intelligence or compliance. Either way focus on groups where you can make a real impact.


Rule #3 - Your partner's sales force needs to get comped
Once you are able to demonstrate a handful of customer wins, it is time to get a deal done. No matter what kind of deal it is, make sure that your partner's sales force is comped for selling your product. If there is no comp for the sales force, your product will not move in a highly leveraged way.


Rule #4 - Dedicate the proper amount of resources to make the partnership successful.
Once again, lots of companies think that once you sign a deal the hard work is done. On the contrary, this is just the beginning. You need to treat your partner like your largest customer and provide the same amount of focus on your partner as you do your customers. You will have to develop a joint business plan together, figure out the proper sales strategy, put together compelling joint collateral and presentations, offer sales and SE training to your partners and their resellers, and finally get your customer support ready. In addition, make one person responsible for making the partnership work.



Rule #5 - Don't get sucked into your partner's black hole.
Be careful of developing custom software for your partner or making too many proprietary tweaks beyond the necessary integration. I have seen early stage companies too often bend over backwards without thinking about the real benefits of all of your partner's requests. As an early stage company you have to walk a fine line between leveraging partners for sales but also not becoming so glued to the partner that you alienate other potential channels. As I have said in previous posts, it is ok to say no to some requests especially if you can demonstrate why it will not help generate more sales for both comapnies. Either way, your partner will respect you and know that you are not a pushover.


As you can see, it is quite hard to support more than one partner for an early stage company.



Slainte Gordon

Tuesday, August 15, 2006

The Post financing phenomena:







Once the deal was done, anxiety crept in. I found myself more stressed and not abole to really sleep for about a week. I know this is counter-intuitive….but I recall some of this from abuzz. There are some post-financing phenomena that many people don’t talk about – that I’ve come to identify and would like to share with all those other entrepreneurs seeking financing out there.
Phenomenon #1: holy shit This occurs when entrepreneurs wake up and realize that people actually believe in the business idea they’ve been working on and are willing to invest millions of dollars in their idea with them as CEO.
Phenomenon #2: holy shit, gotta make it workThis phenomenon occurs particularly in early stage financings. The earlier the company is in its life cycle the more likely it is that the entrepreneur – me in this case – raises the question after raising all the money -- is this really all going to work? The stress comes in from realizing that making it work is up to ME.
Phenomenon #3: holy post financing bluesThis is commonly known as the post financing blues. This is the most well known of the post financing phenomena I’m writing about. It’s the most well known because it’s inevitable and can often hit entrepreneurs as well as their companies (staff) with a wallop. It is easy to attribute this phenomenon to the emotional roller coaster of doing a venture capital financing. Inevitably after the anticipation associated with raising millions with VCs, there’s an emotional let down.
Phenomenon #4: holy re-engagment, BatmanThis typically just hits the CEO (KAPOW) who has been mostly disengaged during the fund raising process. There’s a real process of trying to figure out what to focus on and what to do – because the last 3 to 6 months have all been about financing. This can also hit the COO (SPLAT@!) who has been running things at the company while the CEO has been out raising money.
It’s important to remember when fund raising that the real work starts after the financing. These phenomena take about 30 days to overcome


Slainte

Keltie

Monday, August 14, 2006

Why are start ups like Peacocks






"Enterning the Dragons Den..Know your VC"







Not all characteristics VCs look for in an investment actually help a company succeed; some may just reveal value the company already had. Evolutionary biologists have an interesting theory about venture capital. Well, they think the theory is about peacocks, but the same principles apply.
Biologists wrestled with the question of why peacocks have such big tails. After all, the peacock's tail is pretty to look at but completely useless to the peacock. Beyond useless, it can actually get in the way if a peacock is trying to escape a predator. In a world of ruthless efficiency weeding out evolutionary misfits, why in the world would a peacock evolve such a big, clumsy tail?
Sex, of course. Peahens like long tails, so a peacock with a big beautiful tail is more likely to mate and produce offspring. But that just pushes the problem back a level – after all, peahens shouldn’t like long tails if it makes their mates (and thus their children) more likely to be eaten.
Except that they have another incentive: they want to mate with only the best peacock to maximize their children’s success. But it’s hard to tell a good peacock just by looking at it (I know I can’t). You can’t tell if he’s healthy, has good eyesight, and can run fast. Since the peahen only sees the peacock during the mating ritual, she has to guess.
The tail resolves this dilemma. After all, it makes the peacock pretty easy for predators to spot and catch. It takes a clever, fast, healthy peacock to have such a ridiculous disadvantage and still survive. The bigger the tail, the bigger the disadvantage and the better the peacock has to be to survive. Though not useful by itself, it is useful in instantly communicating something that would normally take a long time to observe. For peacocks, size does matter.
By now, the relationship to venture financing should be obvious. Some features venture investors seek in a company are not directly related to the chances a company will succeed. Instead, many of the items are “peacock feathers” – ways for a venture investor to be sure the company is not just puffing up for the mating ritual.
Are you really worth $2 million more the day your first two customers write $10,000 checks? No, you’re worth $20,000 more. However, both a bad company and a good company can claim that they will sign up two paying customers in the next month. Only the good company can actually show you the checks a month later. Before you had the check, you were facing the “uncertainty discount” – you might be a bad company (or more likely, a well intended but overconfident company).
That’s why VCs pattern match on credibility factors when deciding to spend more time with a company rather than diving directly into the details. When having such a wide selection of available mates, sorting out the good from the bad can be a matter of looking for a nice tail. Feathers in this tail include a high quality board of advisors, a good law firm, a good bank, management with a past track record, or the first paying customer. While all of these things can be very valuable to a startup company, their value to a venture investor can appear out of proportion to the value they bring through their work. As a result, sometimes it may appear that management is sacrificing the long term goals of the company to establish the feathers necessary to get funded. In that case, they really can be peacock feathers - things that may slow down long term success, but that only good companies can take on. In certain models where significant funding can make the difference between success and failure, those actions may be required to succeed at all.
In economics, this is known as “overcoming the problem of asymmetric information through signaling mechanisms.” That’s why it’s much easier to understanding in terms of mating birds, but either way, a few peacock feathers will help you a great deal in raising funds from venture investors.

Slainte Gordon

Friday, August 11, 2006

What keeps you awake most at night ?


What keeps you awake most at night ?

This a leading question often asked by the Venture capital analyst...or your sage like NED on the board....and it is a question that I have answered many times...depending on the latest fire I have been trying to put out back at the company...it could have been the supply chain screw ups..or the manufacturing yield crashing...you have made some boomerangs ..and your customer returns rate looks like a marketing graph..you gotta luv your marketing team they really know how to use Power point...you spin your answer to the questioner and you try to come out on tops...

Now I am not saying I do not wake up in the middle of the night sometimes when something has lite up my brain like a megawatt lamp...and can't get back to sleep...and I just hit the shower and head to work...but thoes occasiosn are getting less ...I learned a lesson from an old friend...he said don't fill up your mind trying to remember the day to day stuff..write it down..on your fancy PDA....and forget about it...then you can let your mind focus on the things you should be working on...you will sleep better...and your day will flow smoother.... I started doing that..and over the years I have far less sleepless nights and far more productive days....

  • Write down one liners on what you need to get done and who wil do it
  • Write down your thoughts on any off the challenges you are facing
  • Forget about it...learn to shift the focus

So I answer the question now....nothing keeps me awake much these days...and that is the answer they want to hear..and the good thing is I am not giving them any BS...

Keep the questions coming....and see you all in chat tonight...

Have a great weekend..

Slainte

Gordon

Thursday, August 10, 2006

You are Not the Only One Suffering


You are Not the Only One Suffering
Alright fellow entrepreneurs, it has time for some tough love. I know you have mortgaged the house to make payroll. I know you have quit your high-paying executive job to work for nothing. And I know its taken far longer for this big idea of yours to ever make a penny.
But you are not the only one who's suffered to start a company so you had better get used to it.
Show me a successful entrepreneur and I will show you an entrepreneur giving blood, sweat and tears to make their company a success. Starting a successful company is not a picnic. Its incredibly hard and emotionally draining. While everyone else will probably try to convince you that its going to pour down golden raindrops tomorrow, I am going to provide a slightly more pragmatic forecast.

It will probably get worse
The truth is it will probably get a lot worse before it gets any better. If you think this is the last time you are going to have to withdraw from your home equity line of credit you are mistaken. You are going to make far more sacrifices in the time ahead than you probably realize.
Those sacrifices are going to involve financial insecurity, tortured and broken relationships, and massive amounts of personal time that you will never regain. People are going to talk behind your back and undermine you. Customers are going to drop you. Investors are going to stop returning your phone calls.

Its going to suck some more.
Theres no light at the end of the tunnel
If you are waiting for me to tell you not to worry, that you all see a light at the end of the tunnel, I'm afraid its not going to happen. I've started nine companies - some of them were very successful and some of them flopped in record time. The only consistency among them was that I couldnt see whether they were going to be wildly successful or complete failures until they had already taken off or had gone under.If you have never experienced this for yourself and have some grand delusions that successful entrepreneurs know exactly when they are going to be successful, forget about it. No one has a clue.

Running a startup company is like paddling your lifeboat to shore in complete darkness. You don't know whether you are going to be saved until you actually hit land, and even then you keep paddling for fear you might be cast off to see once more.
You probably want to hear that the hardship will end soon and that your ship will be saved. In fact that might be the case, but you won't know it until it happens. And until then you need to paddle like mad. Dont expect to know when you will be successful because no one ever does.

You are on the right track
By this point you are probably thinking this guy is selling me fire and brimstone when all I wanted was a little motivational speech! So here is the motivational speech: you are probably on the right track. If it feels like the world is collapsing around you and every decision you have made is the wrong one, then you are in the same situation that every successful entrepreneur has been in before they became a success. Everyone lived in a world of constant stress and self-doubt before their world eventually turned into expensive cars and vacation homes.

Your world is no different.
There is no clear cut path to ensuring that all of your decisions are the right ones. We are all out there trying to do everything possible to make the right decisions and make up for the wrong ones. All of those emotions and doubts you are losing sleep over isnt a sign that everything is wrong, its a sign that you are building a startup company.
You can always go back
If you want a stress-free road to making money without having to endure all of these hardships, go work for a big company. Take comfort in your 10% annual raises and 9-to-5 clock-punching lifestyle. Sip coffee on your many breaks and talk about all of the free time you had this weekend.
And when the Founder of the company passes you on the way to the office in his new Ferrari, remember that he paid for it in all of the miseries that you gave up. Everything is a trade-off, and you need to determine whether what you are giving up right now is worth what you plan on getting when it all becomes golden.
Never give up
It's easy to get distracted by all of the stress and emotions you are probably feeling right now. We all do. The only thing you can do to manage the process is to never give up. No matter what gets thrown at you, keep your feet moving. It's a massive uphill battle for all of us. The ones that make it never, ever give up the fight.



Slainte Keltie

Wednesday, August 09, 2006









Chinese Whispers and Jungle Telegraph…



Did you hear what Jim said…….and on it goes the Jungle telegraph…communication at the speed off gossip…and coffee refills ..the story…ever more modified gets circulated around the company..and before you know it…Jim is being told that this strange guy Jim who works in his dept..is having an affair with the receptionist and cheating on his wife and 5 kids….the truth off the matter is Jim is a single guy and was asking for a phone number and just got chatting about the new layout for the reception area…now tell me it doesn’t happen….. now you could say well that stuff is personal and does not effect the company…but what if it was something that was related to the business?

Communication is the one thing that we can all improve..I have met many employees in my time….and many folks in the church…and the one thing that people complain about is communication..the lack off information.. the poor quality off…and the one side nature off it…so how to improve it…well to start with there will never be enough communication in business for some people…so you will always be behind the curve ….but there needs to be a higher level off communication in a start up due to the organic change that is happening rapidly in all areas….

There are many ways to communicate…I find the inside of the toilet cubical is a great place to put stuff you want people to read…there are the notice boards…tailor the information to the location and audience…develop a communication plan with your senior management team, and strive in the delivery off the plan to be honest..open and simple….Introduce KPI’S across the company…from the incoming materials all the ay through to the out going delivery off your product or service…and publish the results for all to see….when running team briefings (see back to previous post) or all hands meetings…refer back to them…and focus the company on the results…use the screen savers on the PC’s ..the top ten key projects displayed and there progress to plan..use the red to green notation…

Team building events..these are sometimes not what you see the consultants try to sell you…these need to be a mix off fun and business…when a manager goes on a business trip with an engineer..then there is a time to get to know each other and build a relationship…go out for a beer with some off the team and have a good open chat….organise a evening out at a local climbing wall…etc etc..there are many ways to have these sessions….but the CEO can never become to involved..he still needs to save some mystique for the company…well there is a lot more I could say about this…but time is pressing…buy me a beer and I will chat more about it..or ever better give me a job with you..well have a great Wed…and keep the questions coming


Slainte

Keltie

Tuesday, August 08, 2006


Tired and even more tired....

"In a dry and dusty land there is no rest"


I was baby sitting a young pup over the weekend...and hence the lack off sleep and ....the tired feeling...but this is more than just physical it is deeper ...I am getting tired off this project...not so much the technology though the jury is still out on that...and the company has still got a long way to go as an organization if it wants to ship to a T1 supplier like the sonys and cannons off the world...but all that can be fixed ...what can't be fixed ...is the main men....they went through a real bad funding exercise a few months ago and they never learned ...and what makes me really tired is that even after I spoke to the VC's to explain this to them...and got there agreement that they should do better...they all let it go the same way again...I know that the Venture cap guys have there own agenda ...and sometimes like to push a company and stretch it a little...but you need to know the company well before you can do that..if you stretch too much or the wrong way..you will end up with a pile off scrap...but the real pain is that they are scheduling the next tranch when they get back from holiday..it would be too much trouble to get the paper work done with them out on holiday....I know that is crap..if a VC wants to make a deal they will make it what ever it takes....they must have internal issues and our board member from that company needs to have his posse around him to swing the deal..thats what is really worrying me..

Well enough is enough..it is new project time ...you know when you have had enough..this is the 5th start up company that I have worked with...and it maybe is time to find something else to do...

So If you are the main man...make sure you know what the investment profile is and do not wait till the last moment to fix the funding problems....

slainte
Keltie

Monday, August 07, 2006


"An Old Dog and New tricks"


There has been a trend in new start up companies to have an "Experienced CEO " hoisted onboard by the incumbent investors to help bring so experience to the company...this is usually after the "A" round and before the "B" round. The more established venture capital companies see this as a must have..to have an experienced hand on the tiller of there investment, I see it as a bad mistake....I do agree that the founder is not the right person to take the company to maturity ....even though they may think they are...I have seen the problems that happen...you get a senior VP from one of the big corporations starting with you ...the last time he had to talk to a group off people they were all probably senior managers or engineers...now he has to be able to communicate to a cross section of humanity and reach them and deal with the direct questions quickly ,openly and genuinely,...he would have a couple off senior operations guys to go fix things out for him ....he would never really get his hands dirty or know how too...It is hard for them to adjust to the start up resource issues...they will work hard ....but working as a leader of a start up requires a unique skill set...part warrior... part evangelist... part coach... part teacher….and these are not the skills that the large corporations like to see in there SVP’S so what’s the answer: Complex…


It is hard to find the right candidate..but the search needs to be for a commercially smart person with experience in building multi skilled companies..not within a large organization but from an independent stand point..they need to be a confident communicator…in groups and one on one… and they need to be dedicated to the vision of the founders…not the bottom line off there own bank balance..they need to be prepared to learn new tricks..every start up is a unique company and will require a unique approach to the management off it…the fundamentals don’t change…get to breakeven as quickly as you can and then to profit…the Trick is in finding the correct approach…

Slainte

Keltie

Friday, August 04, 2006


This is my dream home…it was a house I discovered when I was exploring the backwaters of the Maine coastline…I could see my self sitting on the decking watching the sunrise over the sea ….while drinking my hot java black…and crunching into my hot bagel and cream cheese…then going for a jog / “yomp” along the beach…the beach has always been a fascinating place for me to explore..it is new every morning ..the tide has come in and changed the scene…taken away something’s and left behind others….each wave is different ..it reinforces my beliefs in a God….

This is one off my dreams….we all have dreams …I have heard many an entrepreneur talk about what they will do when they exit or IPO ….they will do this or they will do that….with events that has happened in the last few years in my life…I know that for some tomorrow may never come…and they have wasted all the years they did have on chasing the dream…I would ask all those who are setting out on a new venture..to read a book “ The Monk and the riddle” by Randy Komisar, I will not plagiarize it here …but in summary, it speaks about the journey being more important than the end destination…and the passion that you make that journey with..he relates it to starting a new venture and goes through the story off a start up that he coached into life….it has always stayed with me…and it’s concepts are fundamental building blocks to my life now…and to how I recruit/ build / coach my teams…and build the company…”if you work with this company is it a job you could do for the rest off your life”…and still enjoy it ?… we may make plenty off money in an exit or IPO..but we may not….so why work at a job you hate..just because you may in a few years be able to move your dream into reality…it may never happen…

If you are thinking off starting your own company..the days off the Dot.com’s have gone…and we are in a new era off investment strategies…the venture capital industry was burnt badly ….and they have a long road to travel before the can fully trust the High technology sector again….so look to why you are starting your company and setting out on that road…and examine your motivations…challenge yourself…do you have a passion for the technology..the people…the business or is it the means to making your dream come true…is it only for your “Retirement fund”

Have a great weekend....


Slainte
Keltie

Thursday, August 03, 2006

Work ...life ..Balance...



I was driving home last night after dinner with a suppliers NPI team...it was a good meal served in a great location (www.champany.com) one off the best Scottish resturants ....I was driving over the local hills back home around 10pm when I looked back over to the River forth valley it looked amazing..the sky was clear and the smoke plumes from the refinary were hanging in the air in vertical stacks....the river was reflecting the last minutes off the sunset...and it was one off those moments that stirred you heart and mind....there is more than work to your life...I when was the last time you walked these hills and came home tired but happy...a long time

I find a new project can take over dangerously quickly and it becomes everything to you...it starts off as a friend in the bar...and ends up your lover....it invades all the areas off your life if you let it...my first company..had me dreaming off how to profile diffusion furnaces in my sleep...lol

I need to get balance and that balance only comes through discipline..I have got the Gym into to my routine now...and feeling the benefits....and now I need to look at how I can improve on the rest of the Work / Life balance....and answers on a postcard to : Me


Slainte
Keltie

Wednesday, August 02, 2006

Fear and Greed....the way of Venture capitalist


I have some sympathy for the VC community and the difficulty off the role they play ..but not much….they could do a lot better…I have worked with VC’s from North America / Asia and Europe…and I have met some good and some bad…some I still work with at times …some are friends…others I would only venture near as a last resort..and even then I would have to be dragged kicking and screaming…



Some thoughts on how to improve the VC / Start up relationship and performance.


  • As a leader always be looking ahead and predicting your cash requirments ..and make sure you get the neccessary cash in ahead off when you need it..if you can...
  • The VC needs to understand the damage that is done to an organisation when it is cash starved ..the impact on moral and motivation...(WRT Maslow's Hyierarchy of Needs) You will start to see the good people pick up there tools and walk...and once that happens it is hard to replace them, the jungle telegraph starts working...company x is having trouble with Investor y....etc....I could expand but enough said..
  • Companies need to been open and honest with the VC's they are dealing with....it allows the VC to plan for further investment if required or..worst case draw out...but at least you know what the future will hold for you and you can plan for it
  • The VC has it's own agenda...get a board with a couple off Independant members...it will help to filter out the VC agenda and make the correct choices for the company...and not only the VC...
  • Communicate to the VC on your terms...and not just at board meetings..have one on one meetings / Tele conferences with the VC reps that sit on your board..
  • Make sure there are no supprises on both sides...

Slainte

Keltie

Tuesday, August 01, 2006

Passion...Vision....Value...


I am maybe alone in my thoughts but ...some off the conditions I take a new role on are that I need from my job is to be engaged fully..engaged with the goals and objectives of project....There needs to by synergy amongst the management team...there needs to be a project worth my time and life..


Now you can team build…but there needs to be a desire in the raw materials first….there needs to be a common agreement and alignment with the objective off the company…and then you can team build…

One thing I look for in recruitment of the management team.. whether it is the Executive team or the Operations team is a good fit culturally …ok they have to meet your Job spec in experience…..but will they fit into the team…not that you want to have a team full off clones…but you need your team to have the same passion and similar motivation….and that motivation is not cash..or the big payout …..it is a passion and vision for building a company….


Tomorrow: are you prepared for the Winter ?



Slainte

Keltie