Monthly Archives: April 2009
I saw that Guy Kawasaki tweeted about an interview that he did about ghost tweeting. The fact that Guy ghost tweets really bothers some of my friends and it seems to bother Shaq too, who is quoted in this NYT article as saying:
As for the temptation to rely on a team to supply his words, he said: “It’s 140 characters. It’s so few characters. If you need a ghostwriter for that, I feel sorry for you.”
But I don’t care. I really don’t. But I read the article and I came across this interesting section where the interviewer asks Guy what he would ask entrepreneurs. It’s towards the end of the interview, so I will quote it here:
IamPaddy: You have conducted countless interviews and surely get asked all the time “What advice would you give to entrepreneurs?” Instead I want to know if there’s anything you would like to ask the world of entrepreneurs? Anything you are struggling with or can’t wrap your head around?
Guy Kawasaki: This is an excellent question. Here’s a list of things I’d like to ask entrepreneurs:
- Why do you think venture capitalists will sign non-disclosure agreements?
- Why do you try to use sixty PowerPoint slides in a one-hour meeting?
- Do you really believe that venture capitalists can add value to your company?
- Why do every one of you think your business is “revolutionary”?
- Why do you believe that the wireframes and prototype that you cobbled together is better architected than Amazon, Oracle, Microsoft, and Apple (pick any big company)?
- Do you really believe beta sites when they tell you that they “love” your product?
- How can you create a forecast that shows you will generate more sales in the first five years of operation than any other company in the history of man?
- Why do you believe you and your co-founders are “proven entrepreneurs” when you’ve never been successful as an entrepreneur?
These questions made me laugh in an obnoxious way. I was thinking to myself, “Oh man. People who do that are so dumb.” And then I realized that I have probably made every mistake on that list (to be honest, I don’t understand question #6 — if you do, please explain it to me). So I finished laughing at how stupid entrepreneurs are and I came up with a list of questions that I would like to ask venture capitalists / investors. Here’s my list:
- Why don’t you use your website to educate entrepreneurs about how to pitch to your firm? I know that some of you do and I think it’s great, but too many of you have some of the lamest websites I have ever seen and you just assume that somehow an entrepreneur who is busy trying to build a business will somehow magically figure out how you like to be pitched. Why not include a frequently asked questions section that explains why you don’t (can’t) sign an NDA?
- Why don’t you figure out ways to add value to your portfolio companies that extend beyond giving them money? Again, some of you do, but too many of you don’t. Rather than asking the entrepreneur how she thinks you can add value, why not tell her? Or at least enter into a dialogue about how the partnership would work and the value that could be added.
- Why do you think that just because a company is in your portfolio, it will be a great strategic partner for the companies that are pitching you? I’m sure there are scenarios where one of your portfolio companies will be the best strategic partner for another portfolio company, but I’m guessing that those would be some long odds.
- Why do you think every one of your portfolio companies is revolutionary? Maybe the reason entrepreneurs think their businesses are revolutionary is that they have been told that your portfolio is revolutionary when it seems pretty ordinary. If you set the bar low, we’ll step over it.
- Why do you insist on asking “What stops Google from doing this?” Can’t we just say, “Nothing. Absolutely nothing.” Because that’s the truth, isn’t it?
- Why do you require that we create forecasts that show that we will generate more sales in the first five years of operation than any other company in the history of man in order to get a term sheet? Guess how I got laughed out of my first VC pitch? I actually showed 4 years of achievable sales. Sometimes it feels like VCs don’t want to invest in achievable. Achievable is boring.
- As for the last question, good point. If you aren’t a proven entrepreneur, don’t say you are.
I’m not anti-venture capital by any means. There are investors in my community who are devoted to educating entrepreneurs and I respect that. Despite my criticism of Guy’s questions, he has actually done a lot to help entrepreneurs hone their pitches. I know that I have used many of the rules in Guy’s 10/20/30 Rule of PowerPoint and you should too. A lot of VCs and angels do a lot to prepare entrepreneurs. After all, these guys keep us entrepreneurs in business.
At the same time, I think it is relatively easy for an investor to get stuck in an ivory tower and assume that entrepreneurs are dumb because they bring an NDA with them. Maybe what it really means is that your VC corporate website sucks.
I recently had the chance to talk to a university class about entrepreneurship. I think talking about business might be the thing I like most, so having the microphone for an hour and half was a lot of fun. During my 90 minute rant about entrepreneurship, I somehow started talking about two types of entrepreneurs: idea people and execution people.
In my opinion, you are one or the other and it is important to know which one you are. I started thinking about the difference between the idea entrepreneur and the execution entrepreneur after reading this post on 43 Folders. Merlin Mann was inspired by this post at the O’Reilly ONLamp blog.
So I started talking about how you are either an idea person or an execution person and there is no question in my mind that I am NOT an idea person. I’ve had a lot of ideas, but they all sucked. I’m not bad though at spotting a good idea, and I think I’m halfway decent at figuring out how to make a good idea work. But my weakness as an entrepreneur is that I’m totally dependent on getting someone else to come up with the idea. As I was going on and on about the difference between the two types of entrepreneurs, the professor interrupted me and asked, “So how much is an idea worth?” and it caught me off guard. I had to think about it for a minute because as an execution entrepreneur, I clearly have a bias towards execution. In the end, I suggested that an idea is worth about 10% of the business and the professor answered back, “That’s generous.”
The O’Reilly blog post that I linked to above uses this formula:
AWFUL IDEA = -1
WEAK IDEA = 1
SO-SO IDEA = 5
GOOD IDEA = 10
GREAT IDEA = 15
BRILLIANT IDEA = 20
NO EXECUTION = $1
WEAK EXECUTION = $1000
SO-SO- EXECUTION = $10,000
GOOD EXECUTION = $100,000
GREAT EXECUTION = $1,000,000
BRILLIANT EXECUTION = $10,000,000
To make a business, you need to multiply the two.
The most brilliant idea, with no execution, is worth $20.
The most brilliant idea takes great execution to be worth $20,000,000.
And Mann (from the 43 Folders post above) writes:
An idea is no more useful than a coupon for a bag of sugar; show me the finished cake, then we’ll talk.
The bottom line is that if you don’t have an amazing, passionate idea and the means to make it superb, you’re probably just a douchebag with an expensive phone. And a stack of NDAs.
I wasn’t nearly so harsh when I was in front of that class, but I do think that in the end I was generous to give 10% to the idea because an idea has no real value unless it is paired with execution. But before all of you idea people get on my case, remember that there’s nothing for guys like me to execute without your ideas.
Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage.
Small businesses do have a great competitive advantage over big businesses right now because it is easier for a small company to know their customers, be responsive, and provide great customer service.
There are a lot of good companies, maybe even great companies with crappy customer service. But good customer service can help make a crappy company a good one. Years ago, I heard stories about Nordstroms wonderful customer service, how supposedly they had let a customer return a tire to the store. One of my friends tested the return policy by taking back a pair of used shoes. The sales associate refunded the purchase price of the shoes (but made it clear to my friend that he was taking advantage of the system). I don’t think good customer service requires that you let people take advantage of you, but it’s probably smart to give customers the benefit of the doubt.
My wife’s an avid reader and subscribes to BookSwim which is like NetFlix for bookworms. She sent her books back a couple weeks ago and hadn’t received her next set of books so she sent a frustrated email to BookSwim and planned to cancel. She received this email back the same day:
Gosh, it’s been a long time since those books were sent; it sounds as if the postal service had a fit of kleptomania. It’s certainly not normal at all! I’m very sorry you experienced this delay. I’ve marked these books as lost and we’ll send you a replacement package from your rental pool tomorrow morning. In the meantime, we’ll keep an eye out for the prodigal books.
The USPS guarantees us 4-14 days shipping time on all media mail, but in the future, if a shipment takes an inordinately long time, let us know right away so we can send you a replacement package – there’s no reason to keep you waiting while the postal service holds your books hostage.
By mid-May we’ll hopefully have return package tracking so these things don’t happen in the future.
I hope this has answered your question. If you have any further questions, please don’t hesitate to e-mail back or call 877-BOOK-SWIM.
Thanks for your patience!
Chip’s email is a bit folksy, but it did the trick. There’s no way Kacy would cancel her subscription now.
My wife’s experience reminded me of something that happened at CrimeReports.com. We had recently launched and we were getting some good press. We ended up with a link from the front page of CNN.com and that generated a ton of traffic. Everything was going great until Google’s servers decided that our Google Maps use seemed extraordinary and they shut us down (even though we were a paying customer). Since CrimeReports.com is a Google Maps mashup, the site is pretty useless when you shut down the map. We were down for almost an hour, but we had a friendly message up explaining that we would return soon. Nevertheless, we received quite a few nasty emails in that hour, many of them with expletives telling us how much we sucked.
We made a point of responding to every email — even the emails that told us where to shove our site. We apologized for the inconvenience and asked them to return now that we had resolved our technical problems. I don’t know that we won a lot of customers back, but I do know we received at least one apology.
The moral of the story is this: Don’t forget that your customer service is more important than your corporate twitter account when it comes to defining your brand. The customer may not always be right, but you probably need them to be your customer.
This is our first Guest Post by Mitch Brinton, virtualCMO. I first met Mitch when I went to work for Campus Pipeline, a higher ed portal company that Mitch co-founded in the late 90s.
I’ve been involved with so many startups I think I may just be a glutton for punishment. However, the lessons learned have been invaluable. Let me share what I believe is critical to the success of any new business venture. In my last business, everyone (and I mean EVERYONE) we talked to absolutely loved our concept. We constantly heard phrases like “awesome idea” and “why hasn’t anyone done this before?”. This gave us an abundance of confidence to move full steam ahead, borrowing money from dear friends and family and investors. We raised $10 million and built the brand and our product offering. It was related to golf and travel, two of my passions, so I knew exactly what the market would want…or did I?
Turned out there were so many competing alternatives for our market that it proved very difficult to stand out among all the noise.
To create a greater likelihood for success, define your market first and your product second. Too many well-intentioned entrepreneurs have a “great idea” they are certain others will also think is great, especially when friends and loved ones cheer them on. So they build it without going to their market and asking, “If I build this will you buy it?” Building a great product or service that all your peers approve of doesn’t pay the bills. The wise business person knows it’s only a “great idea” if your market pulls out their credit card and asks you how many they can order.