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Wednesday, December 24, 2008

Some good news for 2009 if your are looking for funding

Investing In Thick and Thin

By Fred Wilson

A few weeks ago at Le Web, I participated on a panel made up of VC investors. There was a really good discussion about what next year holds for venture investing.
The moderator Ouriel asked if we would be cutting back our investing in 2009 and I replied that we did not plan on doing that
I went on to explain that the venture business is very cyclical and that I've seen at least three and possibly four cycles in the 22 years I've been in the venture business. But I don't feel that its possible, or wise, or prudent to attempt to time these cycles
Our approach is to manage a modest amount of capital (in our case less than $300 million across two active funds) and deploy it at roughly $40 million per year, year in and year out no matter what part of the cycle we are in
That way we'll be putting out money at the top of the market but also at the bottom of the market and also on the way up and the way down. The valuations we pay will average themselves out and this averaging allows us to invest in the underlying value creation process and not in the market per se

Eric Archambeau of Wellington Partners was on the panel and he described some research work he and some associates did a while back. They went back to the 1970s and charted for each year through the late 1990s the number of venture backed companies started that year and the number of $1bn revenue companies and $500mm to $1bn revenue companies that emerged in each 'vintage year'. The result of that work, he explained, was that the number in each category was relatively constant year after year with no discernable pattern and certainly not correlated with or against market or economic cycles. Interestingly, the data was not correlated with innovation and technology cycles either

This says to me that, like the lottery, "you got to be in it to win it" and staying on the sidelines is not a wise approach in any market environment
Mike Moritz was quoted in an SF Gate piece today making a similar point (which inspired this post and its title). He said:

"We've always invested through thick and thin. In fact, we prefer to invest in thin"
It is easier to invest in thin times. The difficult business climate starts to separate the wheat from the chaff and the strong companies are revealed. With many investors on the sidelines (particularly corporate buyers/investors and 'momentum' investors like hedge funds and the like), there is less competition to invest in these 'winners' and the prevailing valuation environment means you get more equity for your dollar invested. That's quite a recipe for success.
But its not a lot of fun to be operating in the 'thin times' even as an investor. Most good firms have a portfolio full of companies that will be struggling to stay afloat and the VCs will spend more time working with their companies in this environment. And when we get an opportunity to put more capital to work in a portfolio company we know and love in this kind of market, well that is often the best investment of all. Note that SF Gate piece mentions that Sequoia just led a big new round in AdMob which if I am not mistaken is an existing Sequoia portfolio company that is a top mobile ad company. Look for more of that sort of thing in this market.
As I've written here recently, I see no signs that the venture market is drying up. Its changing, for sure, and if you aren't running a company that's emerging as a clear winner, its going to be tough to raise money in 2009 from anyone other than your existing investors. And look for them to be more cautious, more diligent, and less generous than they may have been in the past few years.
There's money out there in venture land and its going to get invested in 2009 and its going to get invested wisely for the most part. At least that's our plan and I'm confident we can execute on it.


Tuesday, December 16, 2008

How much !!! you got to be joking, my company is worth more

How many times have you been asked or you have asked "How much is my company worth ?", this is a hard question and there is no real answer, it is different for every company, and no VC will give you the same answer. This is a post I found by Jason Mendelson his a co-founder of foundry group he has a decade of experience in the venture capital and technology industries (www.foundrygroup.com ).
Whats the value of my Start up ?
I regularly get questions concerning how venture capitalists value companies. In fact, there seems to be an increase in the frequency of this question to me personally and through AskTheVC.
It's not an exact science. On top of that, there isn't a broad enough market to come anywhere near a public pricing mechanism. (Insert joke about current public market chaos here). VCs typically take into account many factors when deciding how to value a potential investment. You'll note that few of them are quantifiable into hard numbers and at the end of the day, the VC and company must agree on an exact number in order to get a deal done. So what are some of the factors? In no particular order, I present the following:
1. How mature the company is
What stage is the company? Early? Late? Pre or post product release? Customers? Pre or Post Revenue? Other major milestones? Hopefully it's clear that the later stage company (if all goes well), the higher the valuation.
2. How much competition there is with other potential funding sources
More is better. If I feel like I'm competing with other VC term sheets, then the valuation will likely be higher. I would offer caution to not overplay this card unless you truly have another interested party. I've seen this situation a number of times where the company overplays its hand and doesn't get their fundraising done and loses face in the process.
3. Quality of the management team
With a great management team, risk is taken out of the equation. In fact, many VCs believe (me included) that even the best idea fails without an excellent team. The more this quality team is built out before financing, the higher potential valuation you might get.
4. How the valuation plays into a particular VC's investment thesis
If a VC is an early-stage investor, they'll be used to lower valuations than someone who invests in later stage deals. This bias will have a large effect on the process. I've seen companies that have received term sheets from both types of investors at the same time with wildly different prices.
5. How much the VC thinks the company in particular wants that VC
VCs bring much more to the table than money (hopefully). If a company wants a particular VC to fund their company (either because of domain-specific knowledge, prestige, nice offices, etc.) the price for that particular VC may be lower than others.
6. Numbers, numbers, numbers
Yes, the numbers matter too. Whether it is past performance or predictions of the future, these all play in. Revenue, EBITDA, headcount, etc. all factor highly into the process. That being said (at least for early-stage companies) don't believe everything your MBA professor told you about DCF and other financial analysis. Especially at the early stage, the only thing that I know about your financials is that they are very wrong. So the financials have limited applicability to hard number crunching but are very telling of how the management is thinking about their business.
7. How big the market is
This one is pretty self explanatory. Bigger equals better for valuation.
8. Potential acquirers
Again, this should be easy to understand. If there are many natural acquirers for your company, this only helps in the valuation discussions.
9. Competition
Valuations received by your competitors can potentially make a case for you receiving a similar valuation or at least have a small "market" to compare your company performance to. This argument is of different importance depending on who your VC is. Some care a lot about competitive metrics and some don't value them at all.
10. Current economic climate
Bad climates normally lower valuations. It seems to effect later stage fundraising valuations more than early-stage transactions.
11. Previous deals
A particular VC's experiences and biases will have a large effect on valuations they will present you. Part of a VC's job is to be good at pattern recognition.
12. Other
There are other things as well, including the tried and true "I know it when I see it" analogy. Part of all of these exercises are truly black box.
Please note that I cannot give specific advice to folks on how much their company may or may not be worth. I only know one thing about attempting this exercise - I would be wrong. And you would not be happy with me.
It takes our group many meetings, much diligence and market analysis in order for us to arrive at the valuations we offer potential portfolio companies and even this is not an exact science. For me to attempt this exercise for a company that I am not deeply involved with would be futile.
At the end of the day, it's all about getting a transaction completed and whatever that number ends up being, is a rough approximation of what the company might actually be worth at that point in time.
Or maybe it's completely irrelevant. :) But at least you got funded. Good luck out there.

Thursday, December 11, 2008

How to pick your Dragon to plunder (Joke)

How to select your target VC / Investor
By Georges van Hoegaerden, the managing director of The Venture Company

For over 10 years I’ve built and managed growth for early stage innovation in Silicon Valley and more than ever do I believe that building real disruptive customer value is more important than trying to time an acquisition opportunity. You may too, unless of course you are a gambler and firmly believe that the $3 red-white-blue slot machines in Vegas consistently yield the greatest returns. I will not argue the outcome. Acquisitions remain nothing more than a welcome diversion on your way to building the largest technology empire. And even now when IPOs have dried up any focus away from building your empire is damaging. Real disruptive innovation is resistant to economic aberrations and a consistent focus on customer value remains your only rescue. I believe that IPOs for technology companies will return (and subsequently spur more pre-IPO acquisitions), albeit not with the same players. Real companies can only be built by real entrepreneurs, with real disruptive products supported by real investors. New participants (on both sides) with higher moral values will be the ones to restore trust in the technology industry and subsequently public stock markets that want a piece of it. Today, the VCs are stuck with a product of their own aristocratic making. Commoditization of investment philosophies since the 1990s has generated technologies that can best be described as sexy-cool rather than disruptive and meaningful (with a few exceptions). It paved the way for get-rich-quick entrepreneurs that are skilled in feeding the dogs the dog-food, rather than support the real entrepreneurs that have a dissenting view of the world. So, assuming you as an entrepreneur are for real, how would you recognize an investor that is not. Here are some of my anecdotal recommendations:

1/ Avoid an investor who blames his quick response on ADD Attention Deficit Disorder is an illness, not a skill. Recommend the investor to consult a doctor.

2/ Avoid an investor who does not carry (or seriously considers) an iPhone The iPhone is the biggest innovation in consumer electronics in my lifetime (so far) and if your potential investor does not understand its ramification to the technology ecosystem as a whole, it is unlikely he will get yours.

3/ Avoid an investor who cannot price your company ahead of you. Any technology investor should be able to price the value of your disruption. Ask the investor for the valuation and if he is close to your target, you can share with him your cost model and where you are today on the trajectory. Cost model and stage (the risk) are a discount to the disruptive value, the ability to build the technology is merely a commodity. In Silicon Valley technology is not the risk, but market entry with sufficient disruption is. Walk away from investors that incorrectly evaluate the risk model.

4/ Avoid an investor whose partners you can’t stand Investors in a fund make decisions collectively, they need partner consensus before they can invest - just like in politics (more on that later). A firm with a partner you don’t like should be taken off your VC prospect list, as you cannot risk the influence of the bad apple to your company’s future. Develop your personal blacklist (as we did) based on fundamental people principles.

5/ Avoid an investor who wears his education on his sleeve Wearing a Super Bowl ring means you made it in the real world, wearing an Ivy League ring does not. I wholeheartedly agree with Craig Venter that later stage education (without operating experience) in general is a deterrent to creativity and innovation or the ability to spot and spawn it. The majority of Silicon Valley investors are remnants from a bull market, echoing beliefs that are founded on skewed business principles.

6/ Avoid an investor who asks really dumb questions and is proud of it. I never thought dumb questions existed until I ran into one investor who proudly blogged about how other entrepreneurs simply walked away from him, making his life easier. We walked away from him too.

7/ Avoid an investor who thinks he knows your industry better. Even in the unlikely scenario he does, you should still walk away. Investors that know industries better than the entrepreneur should have become one. So either the investor is better informed (which should send you back to the drawing board) or he thinks he does (which becomes a pain in board meetings). Investors see a lot of things that don’t work, rather than discover the opportunities that do.

The bottom line is that we recommend entrepreneurs not to squander their great ideas with the first investor that waves money in their face. Real disruption does not become extinct quickly and so you literally have years to find a great investor out of the 790 firms that exist in the United States. Thankfully the get-rich-quick money schemes in technology are drying up, so make sure you, as the entrepreneur, also have the integrity to build real disruption that spawns real and lasting customer value for years to come.

Maybe we should compile a Good Vs Bad database on the VC community ?

Beannachd Dia dhuit


Wednesday, December 10, 2008

A cheat sheet to help you with your friendly Dragon (Investor)

What you need to know before you go on the funding trail(or entering the dragons den):

Well you have your business plan written, you have a one pager prepared, the elevator pitch is polished and sharp, your friends think it is great great and your competitors are nervous, it is time to go and dual with the Dragons. There are two keys to a Dragons check book, fear and greed, you need to raise there appetite to open the door to there treasure trove, once you have entered there den, you need to be:



and be prepared to walk away

You need to have a good team, not high flyer's, but definitely street cred ability, a few scars.

You need to have prospective customers.

You need to have a solid financial plan for 3 years.

You need believe in what you are doing, and know that you can do this for the rest of your life.

You need to be committed and demonstrate it.

These are some other thoughts I picked up from Guy Kawasaki (http://blog.guykawasaki.com/)

These are the characteristics of an attractive and fundable date for a venture capitalist or angel investor.

Realness. This seems like a duh-ism, but few entrepreneurs do it. Most entrepreneurs focus on quick flips to an IPO or acquisition. don’t get me wrong: Venture capitalists and other investors aren’t necessarily good guys who want to make meaning and change the world. A simpler explanation is that entrepreneurs who make meaning and change the world usually also make money. Nothing is more seductive to venture capitalists than a company that may have a big impact on the world.

Traction. The easiest way to prove that you have a real business is to already generate revenue. It’s one thing to believe your bull-shiitake pitch; it’s another to have customers and cash flow. You show traction, and investors will suspend disbelief. Fundamentally, you’re asking them to take a leap of faith, and it’s easier to get people to jump off a diving board than the Golden Gate Bridge. If you can’t show traction, then at least line up customer references who will really say, “If they build this, we’ll buy it.”

Cleanliness. Investors are busy, so you need to present a clean deal to them. Clean means that there isn’t a lawsuit by your former employer contesting the ownership of the intellectual property, or a disgruntled founder who owns 25 percent of the company but doesn’t do anything but sit around and complain. The more crap that an investor has to clean up, the less likely he’ll be interested in your deal.

Forthrightness. If you have crap that you simply cannot clean up, then disclose it right away—not necessarily in the first meeting, but soon thereafter. Also, have a plan ready to fix the problems. The worst thing you can do to an investor is surprise her with bad news, like a messy deal with lawsuits and conflicts, beneath the surface of the company.

Enemies. Woe unto you who claims that there is no competition. It means youre clueless or pursuing a market that doesnt exist. Investors like to see some competition because it validates that a market exists. Th en its your problem to explain why you have an unfair advantage. If you truly have no competition (and I doubt it), then either say that Microsoft or Google might go after you because these companies want it all or provide potential competitive threats.

Generally, in everything that you say, ensure that your results exceed expectations. Deliver a prototype early. Deliver your list of references early. Sign up your first customers early. Close a partnership deal early. Launch early. The only thing you shouldn’t do early is run out of money while trying to raise money. Investors seldom fund ships that are already sinking.

Well if you are going for funding, starting your own adventure, be prepared to be changed, and remember to enjoy, when you have lost the enjoyment, you will loose the motivation to succeed, remember money does not bring happiness, it helps, but it will leave you hollow.



Friday, December 05, 2008

Food to help you prepare for next year

Time to get serious about strengthening your systems

By Pam Slim

Bio Pam is a coach and writer who helps frustrated employees in corporate jobs break out and start their own business. She has been self-employed for 12 years and has enjoyed every bit of it.
Her first book "Escape from Cubicle Nation, will be due from Penguin/Portfolio in Spring, 2009" and Pam writes for Martha Beck's blog on a bi-monthly basis.

When I was about ten years old, our roof got in some serious disrepair. We lived in a house built in 1906, and the creaky beams and bones of wood were showing their age. The wooden shingles had been damaged by years of rain and wind, and water started to leak through the ceiling.

My hard-working single Mom did her very best to cover all of our needs, but a $3,000 roof was not going to happen. So we made due, placing pans under the various dripping spots of the ceiling.

I was lying in bed one night, listening to the rain pound outside. Then, without warning, a big chunk of plasterboard fell on my chest. It didn't cause any major damage, it just scared the heck out of me. Our system of staying dry had reached a breaking point.

The same may be true in your business, your health or your home.

I have been reading an interesting book by Sam Carpenter which is called Work the System: The Simple Mechanics of Working Less and Making More. He is a telecommunications business owner in Bend, Oregon, who spent the first fifteen years of his business operating in crisis mode.

His "plaster on the chest" moment came when he was one week away from closing his doors. His health was terrible from working 100-hour weeks, his finances were depleted, his staff was unhappy and customers were angry. He couldn't hold on any longer, and faced certain failure.

Then he had an out-of-body experience (surely fueled by lack of sleep!) when he rose up from his situation, looked down on it, and for the first time realized that his entire life and business was built on sloppy systems. Nothing was documented or planned. Stuff just "happened," which was why crisis after crisis continued.

At that moment, he got clear on what he had to do: take each underlying system in his business one at a time and clean it up. With flawless systems, clearly defined roles and excellent communication, the business would survive, improve and eventually thrive.

So that is what he did, with the help from his staff. The process took a long time, but by rigorously examining and documenting every step of every key process in their business, they were able to make leaps and bounds in efficiency. Providing better service, they raised their rates. Retention improved, and training new employees was much easier.

On the personal side, Sam did the same thing. He made health and sleep a priority. He respected the system of his body, and only ate healthy foods. He started to exercise.

His former 100-hour workweeks are now 2 hours. His company is successful and his life is flourishing.

How can you translate this systems thinking into your own life?

If you are in business for yourself, you can see that every part of your operation is based on processes and systems. They may be a home-grown jury-rigged, inefficient systems, but they are systems nonetheless. To start:
Define the strategic objective of your business. Carpenter gives very specific examples of this in the book. You can also use a much higher-level description like Guy Kawasaki's example of "mantras" in his book The Art of the Start. His personal mantra is "empower entrepreneurs." I am not totally decided on mine yet, but a key objective is definitely "promote liberation."
Define the general operating principles of your businesss. Operating principles guide your decisions, and allow you to choose which systems and processes are truly necessary to run your business. Some examples from Carpenter's business are:-We focus on just a few manageable services. Although we watch for new opportunities, in the end we provide "just a few services implemented in superb fashion, rather than a complex array of average-quality offerings.-The money we save or waste is not Monopoly money. We are careful not to devalue the worth of a dollar just because it has to do with the business.-We study to increase our skills. A steady diet of reading and contemplation is vital to personal development. It is a matter of self-discipline.
List the key processes and systems that underlie your business. For my coaching practice, there are processes like client acquisition, blogging, bill paying, teleclass delivery and forum moderation.
Work on cleaning up and documenting one process at a time. You may want to choose the most high-impact system to document first. Write down all the steps involved in clear, simple, step-by-step language.
Automate as much as you can of the mechanical processes. Outsource things you don't need to do yourself. Tools like autoresponder email systems can work great for this. (Aweber.com is what I use for this newsletter and signups for all my classes)If you haven't started a business, it would be great to keep this framework in mind as you design your business model.

What jumped out at me so clearly as I read Carpenter's book is that by rigorously cleaning up the systems that underpin my business, automating as much as I can and outsourcing any tasks that I don't need to do personally, I will have much more time to focus on providing more services, contributing more free content (blog posts!) and serving more people.

And if you are not a business owner, not to worry -- you can apply this systems thinking to your everyday life.

Some process improvement areas that spring to mind:
Email management (set up filters and rules for taming the email beast!)
Grocery shopping (I hand write my list every week, trying to remember the basics -- how about if I created a pre-printed list that I could hang on the refrigerator?)
Laundry (I used to have four different laundry baskets in everyone's rooms, then I switched to a central basket in the laundry room and it is much easier. Talk about a task I would love to outsource!)
Remembering birthdays (this is one area I have been terrible at in the last few years since I relied on my memory instead of calendaring everyone's birthdays. Maybe next year I will remember to call my best friend on her birthday (January 14) for the first time in three years)
Rotating food in the refrigerator. (We have gotten in the habit of cleaning out the refrigerator every Tuesday night, since the trash goes out on Wednesdays. It really helps cut down on "mystery scientific experiments" growing in the back of the shelf.)You can see your systems don't have to be glamorous. They just have to work well, and allow you to spend your time doing what you really want to do.
Other good resource books:

Beyond Booked Solid, Michael Port
The 4-Hour Workweek, Timothy Ferriss
Getting Things Done, David Allen
Upgrade Your Life, Gina Trapani
Connect: A Guide to a New Way of Working, Anne Zelenka

Good blogs:

Matthew Cornell

Pam's Web page : http://www.ganas.com

Thursday, December 04, 2008

Some thoughts on the "Credit Crunch"

Recession and the credit Crunch

I have been trying to spin out technology from a govt. incubator in the N.E. of England, this has been a long and convoluted track, one which is precariously coming to a major nexus. The track has seen the business model morph from a major project , with debt finance in the teens of millions and matched equity financing , to the bare bones of a model which was built on a deck of cards that are crumbling away quickly. I am sure many of my readers have been there before, where a solid plan on the exterior is actually a convoluted network of supporting items and actions, if you miss or loose a couple of them the whole becomes very unstable( or role is to makes sure we have spare aces up our sleeves). This is normal for a start up but adding on top off that the financial institutions issues with the credit collapse, it makes it nearly impossible to raise debt financing , and the terms from your VC in general is like day light robbery, but what is a guy to do, if you have a project you need to have the resource. I look at it like "Oceans 13" You have a major deal to make loads of cash and have the time of your life executing the deal (For some sad folks it's the execution and not the pot of gold that we crave), you take your money to bank roll you, from where you can get it.

(I do need to take a minute here to say that there are some good guys out there, the guys I have worked with on this deal have been some of the best I have worked with (SIGMA VENTURES), there are a few others that I have come to respect both sides of the pond. )

So today's little gem comes from a favorite blog off mines "Pure VC" www.purevc.com it talks about "the depths and extent of the financial crisis we face today", you can stop here and now turn to your favorite fiction site, BBC, The Sun, The mirror, or let these guys educate you.

Deleveraging, Recapitalizations, & Margin Calls
People still don't seem to believe or comprehend the depths and extent of the financial crisis. Here is my brief explanation. We have been in an economy built on leverage and that leverage is coming down like a house of cards. Banks and financial companies were levered 40:1 loaning monies out that far exceeded the capacity for defaults. It started with residential mortgages and sent the financial world reeling as banks packaged these loans and sold them to others. Due to recent changes in accounting rules, banks were forced to value these assets "marked to market". Thus when the market froze and there was no liquidity to trade debt, valuations declined. We saw the collapse of some venerable investment banks such as Bear Stearns and Lehman Brothers as well as thrifts such as Washington Mutual and Indy Mac and mortgage titans Freddie Mac & Fannie Mae and Countrywide - the list goes on and on. We also saw the swallowing of Merrill Lynch and Wachovia, and the near crumbling of Citigroup. Even Goldman Sachs and Morgan Stanley have not been spared.
For those of you who believe that the financial companies will be coming back anytime soon, please think again. The market no longer values any business model that relies on leverage. In order to deleverage, companies must sell assets both good and bad. This compounds the problem as these assets are worth less and less. To make matters worse, the entire industry is in trouble and there are no buyers to take on leverage (the only buyer is the Federal Government). Anybody that acquires or merges with another insitution is simply asking for trouble. How can an overleveraged bank imagine that it can purchase another weaker overleveraged bank without weakening its position? It can't. Thus, it must go back and raise funds such as Bank of America did after its Merrill acquisition. Dividends will be cut completely. Massive amounts of equity will need to be raised. And when the federal money runs out we will be in trouble.
Thus the economy is in a massive recession and is shrinking because of deleveraging. If we were levered 40:1 and we are going back to 10:1 leverage then you can imagine our economy will shrink that same amount. If you don't understand what I am talking about, think about the size of the economy as measured by credit card transactions. Imagine if your bank suddenly froze your credit cards and you could not buy anything on credit and you had to use cash. Transactional volume would come to a halt because most people use credit to pay for just about everything. Unfortunately, a freezing and cutting of credit extended to consumers may actually happen. You can imagine what this will do to retailers. It looks like we are going back to the age where cold cash is king.
Essentially, we have had a recapitalization of the entire economy. The stock market has lost trillions of dollars as reflected by the haircuts of stock prices. Open up your 401k statement and you will see what I am talking about. 99% of the population does not understand what "recapitalization" means. In the private equity world, recapitalizations are the re-valuing and re-valuation of a company's worth. When you hear "recap" it typically refers to loss of valuation to the downside - think "massive shrinkage of company's value". Sometimes a recap is to the upside but that is what we would call a "dividend recap" meaning that we are taking out money from the company at the time of recapitalization. Anyways, the key theme in a recap is this - previous investors typically get washed out unless they "pay to play."
One final thought - the entire world has been put on a "margin call". How? Well, the market has told us that any business model using leverage is no longer desirable. Thus anybody with leverage is forced to close out its leverage down to either zero or something more reasonable. This is why it is a treacherous downward spiral - the only assets to sell are those that are devalued and those companies that are publicly traded are thus in a bad position. They have margin calls on them and must sell devalued assets that are losing more value everyday.
Do you still think that the next shoe to drop is not the commercial real estate industry? Or the consumer credit industry? The market thinks leverage is evil - any business models with leverage must adapt or become the next victim of market evoluion.

Have a great weekend

Thursday, November 20, 2008

Follow up on funding and that runway

Runway Thinking: A Practical Guide to Startup Survival
by Phil Morle

Times like this, when funding is scarce and confidence is low, do bring one benefit. They force us to focus.
This year at Pollenizer we have had the privilege to work with 18 different startups (so far) and ‘focus’ has shone through as a single theme. Startup founders do understand the need for surgical focus, but doing it is hard.
The runway - a thinking tool for doing focus
To tackle this, I now begin my time at a new company defining the current end to the runway and what can be achieved as we race towards the end. I begin with this slide.

uploaded with plasq’s Skitch!

I have overlayed a diagram describing the stages of a real take off so ignore all the “V” stuff …
We can over-use the phrase ‘runway’ when we plan our strategies, but I have found it an incredibly useful tool for planning because it is difficult to ignore some common, important milestones for the business.
We need to work through it from right to left because the end of the runway defines the scope.
D - This is the end of the runway and you don’t want to get there. It is a time in the future when you run out of money. If you haven’t taken off, you’re dead.
Money in bank / monthly burn = how long until we are dead.
Let’s say this is 18 months away.
Now work back…
C - This is the point you go for your next round of funding if you need it. Notice that the plane is already in the air. Your startup is making money and/or acquiring users. The stats show that this is the natural vector of the business. Consistent and directed. Not variable or faked by mentions on Techcrunch or an expensive ad campaign. Investors need to see momentum - that the plane is taking off. It might not make it across the Pacific, but it is flying non-the-less.
Let’s say this is 15 months away so we don’t leave it til the last minute and need to spend time planning redundancies and canceling the stationary order.
Now work back…
B - This is the point where you have completed a feature configuration that will fuel your business and one day demonstrate momentum. This milestone is rarely defined. Don’t be tempted to sneak in some brand new features after this date. Refine what you have.
Here’s a growth chart from FriendFeed that looks rather like our runway illustration:

Uploaded with plasq’s Skitch!

I snipped it from an excellent presentation by Brett Taylor, one of the founders of FriendFeed. It shows that even well funded startups with a proven, awesome team take time to work the model.
In a startup its easy to delude oursleves that a brand new feature will be the catalyst for adoption but I have never seen that actually happen.
You need to allow the time between B and C to refine the flow, improve registration, look for fractures in user experience, listen to users, refine viral loops and learn how to monetise. How long do you need to do this? The answer is unlikely to be less than 6 months and is probably more than a year.
Let’s say this is 8 months away. So you have 8 months to plan, design and build the core features.
A - Which brings us to now. What can you build in 8 months and demonstrate it is working a few months later? It is likely that a great many world-changing features (that you love!) will go on the shelf to review another day. Checkout Venturehacks for some ideas on optimising this initial feature set:
venturehacks “Startups need to develop an initial product with the least number of features that can sell to the most people.” http://venturehacks.com/articles/lean-startups#comment-5598
Every feature you choose to add, introduces another dimension of unpredicatability which can make the delivery pipeline almost impossible to control.If this happens, you move past a pont where it will be difficult to prove your business before time runs out.
These limitations are not the conditions for boring products. This is the fertile ground upon which startups build their homes. It is how startups beat established competitors because necessity forces them to focus on offering highly focussed products to users.
The runway provides a powerful metaphor to drive hard decisions.
Update: Silicon Valley VC, John Doerr, thinks your runway needs to be 18 months long. This, and nine other survival tips from him here.

Wednesday, November 12, 2008

The Roller coaster ride of your life, Starting your own company

Life as an Entrepreneur is an everlasting roller coaster, it oscillates around:

  • resources,
  • time,
  • products/services,
  • people,
  • market,
  • manufacturing/production,
  • competition,
  • suppliers,
  • family,
  • friends,
  • politics,
  • health and emotions,

I would class this list as the tier 1 off building blocks of your business, it is easy to get swamped when all of these are running against you, or even just a couple, you are usually dealing with these challenges alone or just a couple of you, and it is hard to get clarity and the big picture of the business. I do not have an answer to this problem, but I have my own ways of dealing with it, focus and purpose, what is my vision, and how do we get there, you don't eat an elephant in one sitting, you take it in small bites, you have a critical list prepared before you start and when you feel that you are loosing it, you look at the challenges and match it against the critical list, will the business crash and burn if I don't fix this now, tomorrow or next week. They you look at the key objectives you have set and make sure that you are only tackling those. There is a military formula for identifying risk level during an incident:

  1. Did anyone die
  2. Was anyone hurt
  3. Was there anything damaged

The answer dictates the response.

Some characteristics of the Entrepreneur

Have a look at these statements below, there are 10, if you can't say yes to more than 7 of them, then I would say , find another career, if you still want to take this adventure, then work on filling the gaps. There is one last thing I would say, if deep down you find you are struggling and lost your passion for your enterprise, then look at moving on to another one that will reignite that passion. The most successful and sought after Entrepreneurs are serial ones. They have the scars and hard earned wisdom.

Entrepreneurs are careful about money.
Entrepreneurs are competitive by nature.
Entrepreneurs believe in the old adage, "the early bird gets the worm."
Entrepreneurs have a "head for business."
Entrepreneurs are usually loners rather than joiners.
Entrepreneurs are usually honorable people who do business based on a handshake or a promise.

Entrepreneurs are Risk takers - this is a very important characteristic of an entrepreneur. If you're not willing to take any risk, then you will not succeed as a businessperson. In the everyday course of the business, you will encounter a lot of problems and challenges which you need to decide the soonest.Some risks are worth taking after careful evaluation especially if it's for the good of the business. If you're not a risk taker, then you're not an effective entrepreneur and you're bound to fail in your business undertaking.

Entrepreneurs are Smart - being smart is another characteristic of an entrepreneur. You have to be clever, keen, and witty in all your business dealings. You have to show mental alertness and intelligence so that you can win the respect and trust of customers and other clients.

Entrepreneurs are A leader - leadership is a characteristic that is hard to find among individuals. Not many individuals have the nerve to take the lead. To become a good entrepreneur, you must be a leader. Some say that this is a born characteristic but if you don't possess it, you can also learn to become a leader.You're quite lucky if you're a born leader because you only have to develop your other qualities and use them when you choose to become an entrepreneur. As a leader, you should be able to guide, influence, and direct people. This way, you can handle all your business activities with ease and fewer worries.

Entrepreneurs are Inner passion for business - another important characteristic is having the right passion for business. You have to maintain your enthusiasm and interest in the business. As long as you have the right drive and passion, you can run the business for a long time. 5. Honest and trustworthy - some say that eighty percent of an entrepreneur's time is dedicated to pooling and attracting customers. This may be true because without the customers, the business will not exist. You have to be honest and trustworthy so that you can develop good will.

I conclusion starting your own company can be the blast off your life, it can also be a nightmare, it is not for all, but if you are up for it, then go for it 100%.


Monday, November 10, 2008

Some insight from a former Dragon's Den inmate

Doug Richard (Former Dragon)

Cleantech, Chutzpah and Capital

Entrepreneur, Library House Founder and former ‘Dragon’, Doug Richard discusses the Cleantech and mobile sectors, the pull of Cambridge and ‘FutureFest’.

As Founder and Chairman of venture and innovation research specialist Library House, Doug Richard is at the fulcrum of technology innovation. Richard, who is also the chairman and Chief Executive of mobile social networking specialist Trutap, and was a member of the BBC’s ‘Dragons’ Den’, has a clear vision of the future. And the Cleantech industry is at the heart of it.
Library House has developed its own Cleantech taxonomy, defining “clean energy” to include diverse products, technologies and processes, which through improvements in the clean energy supply chain from energy source to point of consumption, result in a reduction in CO2 emissions.
Despite the challenging economic marketplace, Richard sees the Cleantech industry being a key driver of technology adoption.
“Although you can’t talk about any trend in the marketplace without talking about the elephant in the room that is the global economic downturn, there is a case for some insulation from the downturn for technology-driven companies, because corporations are still actively purchasing technology and the federal markets are still fairly solid. What are the drivers of this technology adoption? The rising price of oil and the clean industries.”
Richard adds that it is not only Cleantech but “dirty energy” too that is driving innovation and opportunity.
“New North Sea oilfields are opening up now, and technology that can extract oil is a technology play that people would not have done ten years ago because the marginal economic costs were too high. Cleantech is absolutely the largest beneficiary of an economic crisis that is predicated on two core issues: the rupture in the flow of capital from credit and a core rising price of key commodities, primarily oil."
“Cleantech benefits because more change can be affected more disruptively by alternatives to oil than by cheaper oil, whether they’re bad ideas like biofuels or good ideas like total renewables. Cleantech is much more complex than most people realised, yet it stands to benefit enormously from the marketplace. You need it to be trendy, you need it to be real, you need it to be profound, and it’s got to have an unimaginable upside dimension. Cleantech has got it all, and a lot of money is going to circle around it.”

Richard says it is important to understand that there are elements to the food chain in clean technology.
“You have Discovery, Distribution, Production, Generation and Consumption and all of these elements of the food chain have innovation opportunities. We can innovate in how little we consume, how we distribute, what we discover and how we produce. People tend to think only of Production, whereas the largest waste in fuel is in Distribution i.e. getting the fuel from point A to point B. So any innovation in that area would have an incommensurate impact in the cost of energy.”
When it comes to investor exits for VC backed startups, Richard suggests that can be a complex area.
“The challenge to understanding exits in Cleantech is to understand that the term is a rubric and applies across many sectors. The timescales for exits change for different areas of the food chain. Solar power or wind farms are profoundly different from, say, an engineering additive to a fuel tank or a new long-lasting light bulb.
“If you’re a true technology based company and you’ve come up with a new widget or a new process, then the exits are pretty much the same as for new technology start-ups, which means an average lifespan of five to seven years, and a return multiple of 25% compounded growth rate per year. If your exit is caught up in production economics, then no-one knows what the exit periods are. But if you come up with a better light bulb, you can exit in 24 hours. A good widget still has a lot of merit.”
Another key research area for Library House is the Mediatech sector, comprising the intersection between Media and Technology, which is where Richard’s own investment interest primarily lies. He has high hopes for Trutap, which is creating the first mobile social network.
“If somebody were to reinvent Facebook to take advantage of everything you can do on a phone, then that’s Trutap. We’re off to a fast start, in 190 countries in our first seven months. Do I have a firstmover advantage? Actually, it’s a first-mover disadvantage. The challenge in the mobile business is that it’s a complicated and messy industry with lots of very large incumbent companies with entrenched interests. And you’re negotiating with a lot of very big players as a small company. They say you always know who the pioneer is. He’s the guy with the arrows in his back, while it’s the settlers who make the money. It’s not necessarily good to be first. But we happen to be very early, so we’re in that position. It takes chutzpah and capital, probably in that order.”
Richard’s other vision, which will see fruition in June next year is the creation of a future technology conference and festival called FutureFest being held in Cambridge.
Richard wants FutureFest (www.futurefest.com) to become “the Davos of innovation”, featuring both a conference, with 50 speakers and 500 attendees, plus a festival based on four themes: Earth, Life, Communication and Machines.
“It’s picked up a lot of momentum recently, and I expect our audience will draw heavily from both the technology community and also from those who have a responsibility to guide very large entities into the future. There’s a whole community of people who care deeply about what’s coming next.”

Cambridge is a natural city to host the Festival, says Richard, because it is one of the few technology “clusters” in Europe, and one of only two in the UK (the other being London).
“At any given time, by Library House counting, there are easily a thousand companies in the Cambridge cluster. That’s a lot for a city of 100,000 people in five square miles. Cambridge defies all normal statistics because it is a very small place doing a very large job. For a while, Cambridge was taking 10% of all VC funding in Europe.
“A cluster is a place where people will choose to relocate to because it improves the odds of success. In terms of true self-standing clusters with all the ingredients, Cambridge is next to none.”

By Gillamor Stevens
"Gillamor Stephens is a leading Executive Search company serving the European Technology, Online and CleanTech (TOC) marketplace through focused practice areas. In addition we have arguably the most dynamic and successful Venture Capital practice in Europe.A distinguished client base has been built up over the last ten years by delivering uncompromising quality of service through personal attention. We are relentless in our commitment to excellence in all aspects of the recruitment process, truly partnering with our clients. The result is exceptional talent sourcing giving our client definitive competitive advantage.The resulting knowledge base and expertise is without equal in our sector and our clients and candidates benefit accordingly. Our innovative range of recruitment solutions allows us to work flexibly with our key clients over extended periods and geographies. We have genuine international capability through our Mosaic alliance partners.The Gillamor Stephens ethos can be summarised in three words: Knowledge, Commitment, Results."

Comment: Not sure on the Cambridge Cluster, there are a few better areas in the UK I believe.

Thursday, October 30, 2008

Burn rate and cashflow analysis

I cannot remember how many times I have been looking at cash flow projections and P&L's, running the daily, weekly, monthly burn rate figures in my mind, and seeing the runway( I don't like the term, but is apt, if you run out off it you crash and burn) disappear, this post below gives you a method of gauging where you sit, on the survival matrix, in your own mind and your investors.

The Survival Matrix:

As Brad Stone and Claire Cain Miller talked about in the New York Times piece about startups slimming down to survive, we are seeing many companies looking at their cash balances and burn rates and deciding to cut burn to increase runway. We've done an exercise with our own portfolio that I wanted to share with all of you. I am calling it the survival matrix.
First we create a table of our entire portfolio and chart current cash balance, burn rate, and runway (cash/burn). We leave out the profitable companies from this analysis unless we think the downturn will cause them to start burning cash. Here's a look at a theoretical runway table:

We then do a scatter plot of burn rate versus runway with runway in months on the x-axis. It looks like this:

We then do a scatter plot of burn rate versus runway with runway in months on the x-axis. It looks like this:

When you do that, you'll get to four quadrants.
Where you want your company to be is in the upper right quadrant, which I call "the comfort zone". The comfort zone is a low burn rate combined with a long runway.
The upper left quadrant is not a bad place to be as well. I call that the "too small to fail" quadrant. While your runway is not long, your burn rate is so small that your investors can fund your company for a while without any new money showing up to join the party.
The lower right quadrant is also not a bad place to be. I call that the "betting on revenue" quadrant. These are the companies that are carrying high burn rates but also have long runways. They are betting on revenues to start coming in and lower their burn rates over time. One thing about this quadrant though, you don't stay here forever. Your runway will come down and you'll either go into one of the upper quadrants because your burn has come down, or you will go into the lower left quadrant.
The lower left quadrant is the "danger zone" - high burn combined with short runway. You don't want to be there.
We've done this analysis on our portfolio recently and we came away from the exercise feeling very good about where things stand. We'll keep doing this every couple months as one of several "macro screens" we do on our overall portfolio health.
If you are an entrepreneur, you should know where your company fits on the survival matrix and if you are a VC, then you probably are already doing this kind of analysis on your portfolio as well.

Wednesday, October 15, 2008

Some good Blogs by CEO'S

I have listed some blogs here for your entertainment, all C-level ..have read...these guys are good in there own right, and there blogs are worth a read...

1. Jonathan Schwartz (President & CEO, Sun Microsystems)
2. Craig Newmark (CEO, Craig’s List)
3. Mark Cuban (Owner, Dallas Mavericks)
4. Ross Mayfield (CEO, Socialtext)
5. Matt Blumberg (CEO, Return Path)
6. Alan Meckler (CEO, Jupiter Media)
7. Kevin Lynch (Chief Software Architect, Adobe)
8. Robin Hopper (CEO, Founder - iUpload)
9. Jason Calacanis (CEO, Weblogs)
10. John Dragoon (CMO, Novell)


Friday, October 03, 2008

Why Venture Capitalists don't call back (sometimes)

Why Venture Capitalists don't call back and what you should do about it.

How many times have you had the "we like your" offering, pitch or business from a VC and you never hear back? I have heard of Founders who have waited for 6 weeks or more for a call back, and are still waiting, now this is not a bash the VC post, just some tips on how to deal with the situation.

Lesson 1: Do not wait, after your pitch you ask when will I hear from you, if you don't hear move on, do not wait longer the two weeks.

Lesson 2: Do not stop pitching until you have the money, deals are not deals to you see the money.

Lesson 3: Ask "what are the next steps, and what is the timescale"

Lesson 4: As a more mature ,wise and rich CEO, said to me "the squeaky wheel gets the oil" Keep pushing, take every opportunity that you can to pitch your company.

Lesson 5: Not all VC companies are the same, so treat each one with respect and understand they know more than you.

I have worked with many VC'S the only thing that is important to the VC is the next deal they are funding, always go to the hungry , smart VC's first and pitch to there interest. The tow drivers for the VC community is Fear and Greed, fear they miss a good deal and Greed when they get one.

I have also posted an article by Brad Feld on how he deals with the this subject in his company, to be fair.


Why Am I Passing?

Every day I tell at least one entrepreneur that I am passing on investment in their company. Some times I tell 10. I don't know what the most in one day is, but it's probably more than 25. I try to respond to all emails so a lot of these are in the "never were appropriate to pursue" category, but at least one each day is someone that I've actually engaged with beyond a cold email that was randomly sent to me.
While I try to give a short explanation - which often is that the company is not in an area that I'm interested in - it gets harder when I've actually spent some time looking at the company, like the idea and the people, and find it relevant to one of the investment themes we have active at the time.
Over the years - I've come up with a set of filters to quickly turn down deals. This is an important process as I want to limit the time I spent investigating companies that I don't investment in. Rather - I want to maximize my time working with my existing portfolio companies and quickly / deeply evaluating new companies that have a high chance of us funding them.
My first pass filter has three parts to it. The top level filter is "is this in a theme that I'm currently interested in." If yes, then I try to determine whether or not I think the people involved can create a huge company. If yes, then I often at least spend some time going deeper.
Assume something falls in the "yes - this is interesting / relevant to my current investment themes and yes - I'm at least interested in the people." Before I spent a lot my time (and their time) I try to figure out where this lives in the context of all the other companies we are looking at investing in.
This is where it gets fuzzy for the entrepreneur. You don't know the other active companies that we are working on. We do. Since all of my partners and I work across all of our deals, we all have good knowledge of the depth of our current pipeline. As a result, I can ask myself the question "is this deal potentially in the top five things we are currently looking at."
If not, I usually pass right away. We'll only make a half dozen new investments or so a year and we are always looking at many more than six companies that we think are potentially fantastic investments. As a result, if something is merely good (or even great) in our mind, it's not going to ultimately make the cut, so it doesn't make sense to spend time on it.
This is one of the benefit of having a fund our size. While we aren't a slave to a specific annual deal pacing, we've learned through the lessons of the bubble the value of having time diversity in our investing activity. To be hugely successful, we don't have to do every great deal we see. In fact, we don't have to do every fantastic deal we see.
Now - just because you get through the first pass filter doesn't mean we'll do the investment. The cumulative number of "top five deals" we are looking at in any given year might be 50 to 100. We are going to do five or six of them. So we are going to spent real time with a lot of companies that we won't invest in. This doesn't mean they aren't great companies or aren't great investments - they just aren't "for us, right now."
We always try to be respectful of the entrepreneurs and pass as soon as we hit the "this isn't going to happen" point. There are different triggers for each company and it's not predictable. I imagine this can be frustrating for an entrepreneur because it feels like you are making process with us when we suddenly say "we are passing", but I'd like to think it's an efficient way for you since we unambiguously take ourselves out of the hunt when we realize we aren't going to get there. Ultimately, this is better for you since you don't have to consume a bunch more time with us on a low priority outcome.

By Brad Feld

Thursday, October 02, 2008

Why you need a business plan

Many entrepreneurs are under the impression that with enough enthusiasm and persuasiveness they can start and run a successful small business. This is a contributing factor for more than half of small businesses failing in the first year of operation. There’s a reason that most successful startups- and a number of established firms- undertake this exercise. A business plan provides a number of benefits to the prospecting or newly formed startup, and here are five:

Banks need it- Try walking into a bank and asking for a loan without a credit check or collateral and see what happens. You’ll be laughed right out the of the front door. Businesses are no different. In today’s credit market, banks are becoming increasingly stingy about lending as risk of default grows. It is your responsibility to provide in-depth, well researched data to ease this concern if you expect them to provide funding.
You need to know your market segment- Grand plans to outsell Amazon.com are fine and dandy, but the truth is that you will need to start small. If you are entering an industry that has growth potential, there are probably already a number of competitors present who are thinking the same thing. You need to know where your business will fit in the competitive landscape, as well as how you want to be perceived. Will you be a low-cost leader? Offering premium products or services? Know where you’ll be carving out a piece of the market will help you build a long-term strategy.
It’s your instruction manual- Every piece of information you need to sell your company to the outside world is in that document. Sales forecasts, target market size, startup cost estimates, short- and long-term strategies- these are all found in the business plan. It will serve as a constant reminder of what you’re doing and why.
It will keep your ego in check- If you’re like most entrepreneurs, there are a thousand ideas running through your head about how to improve your business. These ideas are often muddled when undertaken too early or in addition to other work. Having a plan for strategic implementation, along with descriptions of how and why they are listed in a particular order, will prevent you from biting off more than you can chew. Yes, they are all good ideas. And yes, randomly picking one to implement is a terrible idea.
You might want to retire someday- A blueprint for a business is a necessity for a sale. It documents the business and allows you to communicate the essence of your operation to the intresed aquirer. While a business plan seems like a lot of work (who has time to write thirty pages?), it is one of the most strategically important decisions you can make as a business owner. Whether you’ve just bought your first domain name or have been in business for 20 years, having a document that defined the scope of your venture is an invaluable tool. It will keep you focused on your priorities, help your employees understand how to become more efficient, and provide outside contributors with an understanding of your needs.
by Jason Diperstein



Wednesday, October 01, 2008

The Pricing trap, how much is your product worth ?

The Pricing game, is one of the hardest tasks a company developing a new entrant into a market, if you set it to low, you are stuck there, if you set it too high you won't develop a market or even worse the customer will buy until they find a cheaper alternative and move there custom. This article by Will from the Go big network will give you an in site into his thought process.

The Truth about Pricing

By Will Schroder
Any Entrepreneur that’s ever tried to bring a new product to market has had to deal with one frustrating fact – no one knows what to charge for it! No matter how well you think you can predict the market or how much research you’ve done, until people start paying for your product you’re still just guessing.Even then, when people are actually forking over their hard earned cash for your product, you still don’t know if you’ve optimized for the best possible price to generate the greatest number of sales. Fortunately there are some simple strategies you can employ to quickly arrive at a happy medium and give yourself a little piece of mind.

The Binary Nature of Pricing
The first pass you’ll want to take at pricing is to eliminate all of the people that weren’t going to pay you to begin with. What may shock you is that when it comes to a consumer’s perception of pricing, it’s not always the actual amount that scares people; it’s whether or not they have to pay at all. Pricing is more or less binary for consumers – they are either going to pay or they won’t – the actual price is incidental.Having launched ten companies myself, all in different industries ranging from automotive to financial services to television casting, I’ve found that in each case you get a group of consumers that are willing to pay just about any reasonable price for the product, and a group of consumers that won’t ever pay a penny.There’s something that goes off in a customer’s head when they have to pull out their wallet. Up until that point the value you were providing may have gone relatively un-noticed. But when the customer has to break out their credit card and start typing in those 16 magical numbers, they think twice about the value of your product. Instead of developing your pricing to lure the group of people that just aren’t willing to pay for your product, focus on maximizing the yield of the customer who will pay for your product. It’s a lot easier to get someone to pay 10% more for your product than it is to reduce the price of your product and get more people to pay for it.

The “Freemium” Model
Next you’ll want to figure out how to separate the paying customers from the non-paying customers, without alienating either.
Leave it to the overzealous Internet nerds like me to invent a word like “Freemium” to explain a basic price gateway model. Freemium is a word used to describe giving a portion of your product away for free in order to attract interest, then charging the most passionate customers for premium benefits. I’m not entirely sure, but I think this model was pioneered by Baskin Robbins every time they handed me a free sample of chocolate ice cream in order to convince me to buy an entire cone. These days the freemium model appears when I want to sample a song on iTunes but have to pay to download the whole song onto my iPod.The beauty of the freemium model is that allows you to test two pricing strategies simultaneously. You get to see how many customers would be interested in your product for nothing at all to gauge the overall interest in your product. It then allows you to learn exactly what about your product people are most interested in paying money for.
Try every Possible Price
Once you’ve separated the paying customers from the non-paying customers, you still need to settle on the right price to charge them. There’s one simple answer here: try every possible price.I’ll give you an example. At Swapalease.com, a site that allows people who want to get out of a car lease to connect with people who wanted to get into a car lease, we charged people to post their car leases on-line. The problem was, we didn’t know how much to charge them, so we tried every possible price.Our early estimates figured we would probably get around $24.95 per posting on the site. We constantly tried new pricing strategies to figure out what would be the right price that consumers would accept. Wouldn’t you know that after six months of testing we found out the number was over $100 per post!The only thing that kept us from simply making four times as much per sale was our willingness to test the sensitivity of price. Had we gone with our gut instincts we would have vastly undervalued the product and left a whole lot of money on the table.
It Pays to Try Everything
The only thing you can rely on when picking the price of your product is having to change it – a lot.
If you can develop a system to test as many possible price points with as many consumers as possible, you can hopefully uncover that hidden gem that is your perfect price. Until then, keep trying something new. It’s the only surefire way to win.

Tuesday, September 23, 2008

Effective Collaboration, an efficiency multiplier for free

Effective Collaboration
The word collaboration has become widely used but is it just empty rhetoric? Collaboration is defined as "the act of working together to produce or create something." In this complex business environment people are being asked to share knowledge freely, to learn from one another, to shift workloads flexibly, to help one another complete jobs and meet deadlines, and to share resources-in other words, to collaborate. This activity is about behavior, work habits, culture, management, and business goals and value.With that said I ask, "How likely are your employees to say they "sink or swim" together, want one another to succeed, or view their goals as compatible?" Bringing people together is no longer a choice ... it is the only way to assemble the knowledge and experience required to accomplish the complex tasks your organization faces.Here are Six Ways to Build Collaboration
1. Model collaborative behavior - Your actions send a clear message - do yours "say" collaboration is important? When the senior team works well together and internal communication is frequent and open the collaborative nature trickles down throughout the organization.
2. Create a culture of generosity - Regular mentoring and coaching helps establish a culture of generosity and cooperation in place of a more transactional "I'll do this for you if you do that for me" culture. When individuals give freely of their time to support the success of another employee everyone wins.
3. Ensure the right skill set - Employees are encouraged to cooperate and they want to cooperate, but do they know how? Crucial skills include holding difficult conversations, appreciating others, questioning to clarify ideas, attentive listening, disagreeing in a constructive way and productively resolving conflicts. Explicitly develop these skills - don't let it be left to chance.
4. The right team leaders - Teams need strong leadership and strong leaders are often task- or relationship-oriented. When a complex problem is at hand assigning leaders who are both task- and relationship-oriented will support the high level of collaborative behavior required for success. Which of your leaders possess strong project management skills and the ability to foster the environment of trust and cooperation which supports knowledge sharing?
5. Role clarity - improves when the roles of individual team members are clearly defined and well understood. Without such clarity, team members are likely to waste too much energy negotiating roles or protecting turf, rather than focusing on the task.
6. Rewards - How does your company reward its employees? In a culture of collaboration rewards are based on team performance - it can't be a zero sum game or heavily weighted to individual results.

Does your organization's culture truly support collaboration? Strengthening your organization's capacity for collaboration requires a combination of long-term investments in building relationships and trust and developing a culture in which senior leaders are role models, AND smart short-term decisions about the ways teams are formed, roles are defined, and challenges and tasks are articulated.

By brooke.ingram

Thursday, September 18, 2008

Passion, Vision, Change and You

I have been immersed in thought for the last 4 months, been sifting through my thoughts, I am in the middle of a deal at present which is going in a different direction from what I want at this time in my life. I have been assessing what is important to me, health ? wealth ? my faith ?family ? and I am concerned that the changes I have went through in the last 15 years as an entrepreneur have subtle drifted me away from the things that are truly important to me, my Family and my Faith. I know that we need to earn our crust to make our way in this world, but at what expense. I am not here to preach but just to pose the question to those who drop by, What is important to you for the long run ? every bodies answer is different, and just as valid, but the life we live is our choice, and the result to the answer of the question, have you made the choice, or did you let situations around you make the choice for you.

I love work, I love to work with passionate people who have vision and commitment, the moments of "complete synergy" that take place, which confirm this is where you should be at this time, and for this time, are priceless; and they are addictive, like Crack. This is where you need to achieve the balance, between what is important for the long run, and not allowing these moments to dictate what is important. The good entrepreneur is an addict, who knows how to manage that.

Have a good weekend



Thursday, September 11, 2008

How to make decisions (not for the serious folks)

Question: How can a company ensure that there is a healthy level of disagreement when making a decision?
Answer: The ancient Persians used to make decisions twice–first when they were drunk, then when they were sober. Only if they agreed in both circumstances would they act on the decision. The process worked. The Persians ruled much of world for three centuries.We think companies need to imitate the Persians. As you might imagine, we get a chuckle any time we say this to an audience. People want to retire to the bar to continue the discussion.
What people miss is that most corporations make major decisions in a state that, while not drunk, is certainly emotional. Companies don’t need to have executives pop a few martinis and reconsider their thinking. Executives need to find a thoroughly sober, dispassionate environment in which to give their emotional decisions a second look.

Tuesday, September 09, 2008

Brand management

How is your personal brand, are you managing it well ? where do you rate on a google search, how close to the top off the listing do you fall. In this economy you need to be found, applying for new projects takes time, referals or head hunting is a lot faster. Do you have a linked in profile http://www.linkedin.com/ or a http://www.zoominfo.com/ profile there are many different social media platforms that you can use and manage your brand, you are the only person who will. There is the real world network and there is your virtual network, both a neccesary , but I find in business my real world network is more important, where as my virtual network is the definative way to find new projects. Take some time and see what you can find out about yourself on the net, how easy was it to find yourself, and then ask how easy is it for someone else to find you. I hear you ask so whats this to do about buisness ?everything, if you can't market and brand yourself then how will you manage to do it for your own company. It is important to understadn what your market culture is like, this is a multi cultural market and you need to match your branding to suit the culture. I have included an nice article on branding from Magners to wet your appetite, also if you have time have a read at Guerrilla Marketing for Job Hunters: 400 Unconventional Tips, Tricks and Tactics for Landing Your Dream Job by Jay Conrad Levinson.

‘Magners has redefined a sector,’ says Rune Gustafson, UK chief executive of branding consultancy Interbrand, on the cider that in just a few years has taken the British drinks market by storm.

Magners has redefined a sector,’ says Rune Gustafson, UK chief executive of branding consultancy Interbrand, on the cider that in just a few years has taken the British drinks market by storm. ‘We’re basically giving people permission to drink cider again – or to drink it for the first time,’ adds Maurice Breen, marketing director for Magners. ‘You are no longer the mad person at the bar not drinking beer.’
Magners has been on the market for decades in its native Ireland under its original name, Bulmers – William Magner of Clonmel having entered into a cider-making joint venture with HP Bulmer of Hereford back in 1937. ‘Up until the early 1990s we were a pretty small operation,’ says Breen. ‘So the company decided to invest heavily in getting its story across to Irish consumers.’
This marketing push led to increased sales in Ireland, so in 2003 the drink was launched overseas, initially in Glasgow. The name was changed to Magners for the British market to avoid a clash with the HP Bulmer brand, by now part of the Scottish & Newcastle stable.
Glaswegian drinkers came flocking, so Magners went Scotland-wide in 2004. Advertising and sponsorship campaigns began, and Magners drinking glasses appeared in pubs. By the end of 2004, Magners had become the leading cider in Scotland. Magners then went UK-wide, with sales growing 264 per cent in 2006. The drink is now also on sale in the US, Australia and across Europe.
Drinking cider is suddenly cool. Why? Much of Magners’ success is rooted in two factors that were new to the UK cider market. First, Magners is sold in pint bottles in pubs and bars, rather than on tap. Second, bar staff and drinkers are urged by the marketing blurb on Magners bottles to pour it ‘over ice’. ‘Putting it in bottles was genius,’ says Robyn Lewis, drinks editor of the Grocer. ‘Not only because they could charge loads for it, but also because consumers had the Magners brand in their hands. You’d walk into pubs and Magners bottles were everywhere. It’s much harder to build a brand with a draught product.’ Another advantage of serving Magners in a bottle, says Breen, is that cider doesn’t look particularly appetising when served on tap. ‘Beer presents nicely on draught, with a nice head on it. Cider doesn’t necessarily have that.’
Cider poured out of a bottle and into a glass full of ice looks great, he adds. ‘It wasn’t rocket science. But it was a simple, powerful representation of our brand to consumers.’
The idea of serving Magners over ice originated in Ireland. ‘It was based on the fact that there wasn’t great refrigeration in a number of pubs in Ireland, so consumers poured it over ice naturally,’ says Breen. ‘I laughed when I first saw the concept,’ remembers Lewis. ‘I thought: “Who’s going to drink cider over ice?” How foolish I was.’
Although cider has traditionally been seen as a summer drink, Magners now sells quite consistently year round, thanks to a series of season-specific advertising campaigns that have persuaded consumers every month is a cider-drinking month.
Magners’ success is also partly due to being in the ‘right place at the right time,’ says Lewis. ‘There had been a massive decline in alco-pops. They had a terrible image. People were looking for another long, sweet alcoholic drink in a bottle.’
The success of Magners has led to a ‘huge boom in me-too brands,’ Lewis adds. Scottish & Newcastle re-launched Bulmers. ‘They literally flooded the market. Bulmers had a huge marketing campaign and almost identical packaging to Magners.’
The fact that Magners itself is sold as Bulmers in Ireland makes matters even more confusing for consumers. S&N’s English Bulmers is doing very well across the UK but is not sold in the Irish Republic.
With competitors snapping at Magners’ heels, the challenge for the brand today is maintaining its strong market position. ‘Magners’ competitors are riding on its success,’ says Gustafson at Interbrand. ‘What it needs to do now is show leadership again.’

By Scott Payton