So you want to launch a business...

My sentiments, exactly

I was truly impressed...

A friend recently sent me a link to a powerful essay on the state of the world of start-ups.  It is so powerful, and so carefully crafted, that I prefer not to offer you sound-bite tidbits from it.  Instead, I urge you to read it yourself - HERE. 

There is value in it for everybody in the start-up world: entrepreneurs, investors, dreamers, coders, and commentators.

And when you finish with that, you may want to re-visit "boring stuff that people actually need."

I personally find no reason to admire nor desire to emulate fortunes made in mindless electronic time-wasting and heartless financial arbitrage.  They are both selfish drains on the social and economic fabric of the entire globe.  

I prefer enterprises with actual hearts, rather than cheesy red icons.  

There's real money in beans and shovels

When I think about the vast investment of talent and energy currently concentrated on social media, I immediately think about the great California gold rush of 1849.  An army of energetic, determined dreamers rushed to the Sierras with the common purpose of striking it rich.  They bet what meager savings they might have had on beans and shovels, so they could stand shoulder to shoulder digging for seductive, but elusive, wealth.  Anybody who could dig and pan could give it a shot.

A few made some real money.  A few more escaped healthy, having only lost the year or two they invested.  Most were financially ruined. And many died in the quest for instant riches.

The ones who profited most from the gold rush fell roughly into two categories: speculators who financed a stable of prospectors, providing a "grub stake" for a large share of any profits; and those who supplied the beans and shovels.

Today an army of bright, talented young people are searching for gold in the social media craze.  It doesn't seem to matter to them that only a very few of the thousands of start-ups actually manage to sell out to Google or Yahoo for a few million dollars. They have what the old-timers called gold fever. And, as before, it's an open field. Anybody who can code a little can launch a website or create an app.

The parallel is inescapable.  Wealthy angel and venture investors speculate via subsistence-level grub stakes to a highly filtered minority of the prospectors, well aware that only a very few of them will even survive as businesses, let alone prosper.  Cloud hosts, developmental software suppliers, and pizza parlors provide the modern equivalents of beans and shovels.

Perhaps, once this latest bubble has burst, all those brains and all that energy can be focused on "boring stuff that people actually need."

The Winner's Circle - Stuart Zimmerman

I first met Stuart Zimmerman in Miss Waite's third grade class at the Flynn Park School in University City, Missouri.  That was a long, long time ago.  We have history.  More recently, he and his partners have actually made history.  From a 1994 start with four friends, no clients and no assets under management, they have built two substantial businesses that manage over $14 billion for satisfied investors all over the world.

I recently asked my old friend the same question I always ask obvious winners.  "What was the most important strategic decision you ever made?"  Here is his answer.

We decided to follow the academic evidence showing that passive management, rather than active management, was the right way to invest our clients’ assets. For us, it was simply doing what was right for our clients. When we saw all the evidence showing passive as the clearly better strategy for investing, we actually felt like we would be doing our clients a disservice if we followed anything else.

Instead of spending considerable time and money trying to time the market and pick winning stocks and mutual funds, we would be doing the best we could for our clients by simply capturing the returns the market provide in a low-cost, tax-efficient manner. In effect, we skip looking for needles in the haystack by simply owning the whole haystack.

Sticking to this strategy helped Buckingham Asset Management grow to have more than $3 billion in assets under management. And when we saw the difference it made to our clients (not having to worry about what the market was doing, allowing them to spend more time on other pursuits, etc.), it also helped us realize that we could help other firms across the country do the same thing for their clients. 

We started BAM Advisor Services to provide other firms with back-office services adhering to the same investing beliefs. Today, BAM has grown into the leading network of practitioners combining the science of investing with true wealth management, with our firms totaling more than $11 billion in assets under administration.

For us, this is simply proof that doing the right thing for your clients — even and especially when others aren’t — is simply good business. We continue to grow rapidly. Now, we have 110 associates in our family, building our role as the center of passive investing. Stay tuned!

One more confirmation of the obvious truth of core strategies:

What you are doing must truly matter to your clients, and it must set you apart from your competition.

 Nice work, Stuart!

The Winner's Circle - Jim Scapa

I first met Jim Scapa way back in 1986. He was pushing the envelope back then, and continued to do so over the following 25 years. Back then Altair had about 20 employees.  Now they have over 1300.  Back then they had only a handful of clients. Now they serve over 3,000 businesses world-wide. As with our other Winner's Circle contributors, I asked Jim a single question: what was the single most important strategic decision that you have made? His answer follows below, and it is a truly classic example of a fundamental entrepreneurial rule of thumb.

What you are doing must truly matter to your clients, and it must set you apart from your competition.

Here is Jim's story. 

To me, the most important strategic decision I have made was to invest in the HyperWorks business model back in 1999. At the time, most of my organization was opposed to this direction as they saw the short term risk of cannibalizing existing revenue streams. Since most of my team are engineers and extremely analytical, many developed impressive spreadsheets to demonstrate to me the weaknesses of my model and argued strongly in our open, dialogue rich culture. After one year of hand wringing and listening to all points of view, I went against the common wisdom and rolled out HyperWorks units.  

The HyperWorks Unit (HWU) licensing concept was the first in our industry to utilize a pay-per-usage system, drawing units (tokens) from a central pool served globally.  It was quite a revolution in the engineering software sector where licensing was typically restrictive; often geographically limited or hard-coded to machine ID’s.  In addition, the clever “leveling” vs. “stacking” concept – assigning a unit value to each product in the suite and charging only for the highest priced product - offered tremendous value and flexibility in using products within the suite.

Today this model is the backbone of our value proposition. Customers recognize Altair’s commitment to deliver a broad solution set of best in class technology, backed by best in class engineering know-how and service for a very fair price. We continue to increase the value by adding new products and paying attention to evolving technology and business trends.  We also continue to tune the model to adjust to the trends as we see them.

We see our business model as a fundamental advantage. With that in mind, we applied for, received and have periodically extended patents on it. We also invest in the technology to make the model work well for customers and for ourselves.

Exceptional products.  Responsive service.  Breakthrough, exclusive pricing model.  And the MOXIE to make it real.

Result: remarkable success!

Alert!! Regional powerhouses prepare for economic warfare

It's far too late to call this development "new."

Detroit became big and important because of autos. Pittsburgh is/was the steel city.The San Francisco Bay area and the Boston metroplex both have very obvious innovative economic power that transcends the states where they are located, and even the country in which they grew up.  But they simply happened, in many respects. 

By contrast, Austin, Texas, became Silicon Hills through the careful and long-drawn-out work of George Kozmetsky and others.  Its new economic power was quite deliberately designed and built.

Then the whole world got serious about carefully building and re-building cities and whole regions centered on the "new economy" of information technology, biomedical breakthroughs, exotic materials, and highly subsidized innovation engines of all sorts.

Modern versions of the ancient Mediterranean city-states are officially an emerging global phenomenon.  Country-wide competitions and massive government subsidies are creating technologically-focused, globally-competitive regions in places like Heidelberg, Germany and Montpellier, France.  China is building technology-specific innovation cities from scratch.

To the extent that local or regional critical mass matters in the maturation of innovative technology-based businesses, these new super-clusters of related universities, incubators, and mature businesses are making serious preparation to blast away at each other for meaningful shares of the global economy.

Heidelberg, Germany, was once known primarily as the ancient university town where Mario Lanza sang "Golden Days" and "Drink. Drink. Drink." in The Student Prince.  Now it is the center of the Rhine-Neckar Triangle where Germany is building a bio-med technopolis.

The Technopolicy Network is a cooperative self-improvement organization that helps regions work their way up the prosperity ladder through sharing of best practices related to innovation, economic development, and globalization.

"The Technopolicy Network brings together experts and practitioners on Science Based Regional Development. Together, they engage in an exchange of knowledge and experience that helps policy makers, technology transfer officers, facilitators and researchers alike. The international contacts promote a broader understanding of the issues involved and provide opportunities for cooperation."

The Brookings Institution just released a new report on the benefits and challenges of industry "clustering."  They conclude that the cluster phenomenon will be a major factor in the "next economy."

"...what matters most is the simple economic fact of clusters. Thanks to clusters, firms, regions, and the nation are more productive than they might otherwise be. As a result of clusters, millions of American workers, firms, and regions are enjoying higher wages, more competitive industries, more innovation,and more successful entrepreneurship than they might otherwise."

What does all this mean to an aspiring entrepreneur?

• You might want to figure out how to ride on the coattails of a regional cluster.  Think of all the complementary businesses that formed and grew around the Big Three auto companies in Detroit.
• Make sure any cluster you join is well-positioned against its foreign competition.  If your region loses, you lose, too.
• As a consequence of increased, deliberate clustering, the pace of innovation is likely to increase well-beyond its current breakneck speed.  It's more important than ever to be timely with new product introductions.

 In simpler terms...

1. Where's the party?
2. Who's going?
3. What time does it start?
4. What can I bring that will get me noticed?

How to kiss a giraffe...

"There is no greater act of courage than being the one who kisses first."

                                    - Janeane Garofalo

Note:  The following anecdote is an excerpt from "Guests at the MOXIE Hotel," an unpublished, anonymous, hand-written manuscript found under a pile of ancient National Geographic magazines in a rundown beach cottage on the Oregon coast.  Some researchers believe the manuscript may be the last remaining link to D.B. Cooper.  Others disagree.

Low clouds hung over the beach, and the spray from the wind-tossed breakers carried an uncommon chill.  Hot tea was definitely in order.  Just as I turned to follow my sandy footprints back to the November quiet of the shuttered resort, a dull gray bottle washed in from who-knows-where.  Alone, yet not wanting to seem unreasonably stuffy and aloof, I picked it up, and popped out the customary old and weathered cork.  No genie appeared.  What a shock!

BUT THEN ... a quiet, gentle voice reached out to me, tempting, tempting.  "You have one month and three choices," it said.  "If you kiss a puppy, full on the lips, your bank account will be instantly enriched by $100."

Nice, I thought, but no big deal.  Not very tough, but not much payoff, either.

The voice-from-the-bottle went on. "Or - you may choose to kiss a mule, full on the lips, and your bank account will be enriched by $1,000."

This was getting interesting.  Mules do have some prodigious choppers, being herbivores and all; but I figured could probably get the job done without any permanent damage to my hauntingly average good looks.

"Or," my mysterious friend continued, "you may choose to kiss a giraffe, full on the lips, and have your bank account enriched by $1,000,000."

Whoa!  A million bucks.  But kiss a giraffe?  How was I going to pull that off?  First, I'd have to find a giraffe.  Then... whatever.

Leaving the bottle on the sand, I turned my back on the mist-muted sunset and headed for a warmer place and a hot cup of tea.

Back at the all-but-empty cafe, I sipped my tea and considered my options.  Hmmm.  I could be hallucinating.  I should probably forget the whole thing, mention it to no one, and get on with life.  Of course, the puppy deal would be an easy $100, and nobody would notice.  But why bother?  Chump change.  The mule stunt would be tough to hide.  If anybody asked why I thought it was a good idea to kiss a mule, I obviously couldn't say a talking bottle told me it was worth $1,000.

But, for a million dollars, I ought to be able to come up with a good story.  On the other hand, getting access to a giraffe, finding a way to get to kissing height, enticing the giraffe to cooperate, and so on, would definitely cost some time, and possibly some serious money - all before I got my million.  I'd be risking some raised eyebrows and a not a few bucks.  My boss might even think I had gone around the bend, and give me a 100% chance to work somewhere else. 

My teacup was empty.  My mind was made up.  I walked out of the cafe and headed for my car.  As I turned the key to unlock the door, the dull gray bottle rattled across the pavement and, almost expectantly, came to rest against my left foot.  If this was a hallucination, it was a good one.  I sucked in a full tank of cold, salty air, and dutifully urged the cork to freedom.

"Have you chosen?"

"Yes," I said. "I'll take the giraffe."

"I thought you would."  Silence.  I sensed just a hint of a sigh, and perhaps a chuckle.  Then I heard, with painful clarity, the unbearable truth.  "The three option deal was just a test.  I have no way to put money in your bank account.  Besides, anyone in his right mind knows that talking bottles only appear in fairy tales and hallucinations." 

"Go find a lonely, untamed, very large, unusual market that really wants a kiss, and lay a big juicy one right on its lips.  Create a startup business that matters to somebody besides you.  The million dollars will follow in due course - perhaps."

"But you said..."

"Yes, you're right," said the talking bottle.  "I quite arbitrarily changed the deal; but sometimes life just isn't fair.  It's dangerous to forget that.  And don't forget this either..."

"If making a million bucks was easy, anybody could do it."

~***~

Artists, Salesmen, and Heroes

"An artist is a dreamer consenting to dream of the actual world."

George Santayana

"Artists must be sacrificed to their art. Like bees, they must put their lives into the sting they give."

Ralph Waldo Emerson

"In the modern world of business, it is useless to be a creative original thinker unless you can also sell what you create."

David M. Ogilvy

"The speed of the boss is the speed of the team."

Lee Iacocca

What an amazing challenge it is to be an entrepreneur!!  And what a privilege!!

True entrepreneurs do it all.  They imagine it, bet their egos and their fortunes on it, build it, and sell it.  They create alone, for their own intellectual and spiritual delight.  Then they inspire teams to achieve the full realization of their inventions.  And then they set to work on and for others, to transfer the value of their creations to the needy but ignorant marketplaces.  And quite often they fail.

Entrepreneurship is not for the faint of heart.  It is not for those who relish peace and contentment.  And it is most certainly not for those who lack the courage of their convictions. 

Startup businesses are for those who would, like Tennyson's Ulysses, gather a team of staunch comrades and seek the ultimate adventure, by choosing to "sail beyond the sunset, beyond the baths of the western stars... strong in will to strive, to seek, to find, and not to yield."

If you are part artist, part salesman, and part hero, then there may be a startup in your future.  And you will definitely be off on a great adventure.

Your startup is doomed, unless...

RULE:  At its heart, what you are doing must genuinely matter to your customers, and it must set you apart from your competitors.

Follow the rule or your startup is doomed.

The vast majority of successful businesses do not appear on the evening news or on the front page of TechCrunch.  They quietly go about the commonplace tasks common to all enterprises.  They present themselves to potential customers in some niche market, work to close sales, and attempt to deliver enough value to assure a long-term relationship. 

Only very occasionally do we see a remarkable breakthrough or fad that sweeps a company to riches.  Think Facebook, Twitter, and (perhaps) Foursquare.  If that happened all the time, it wouldn't be news.

By the way, just in case you haven't heard, the users of Facebook, Twitter, and Foursquare are not really customers.  Their actual customers are the ones buying information about those poor addicted users or paying for advertising space.  The users are just raw material in a big information factory.

So, how can you make sure your start-up is both relevant and unique?  Ask yourself these four simple questions.  And make sure you have good answers.

• What significant underlying marketplace group/trend/opportunity will carry your new business to success in spite of itself?  

• What compelling end-user need does your business address?  

• What makes your product/service special?  

• What differentiates you from competitors and substitutes?

Here are some reference readings to help you improve your chances.  See Riding the Wave. Also Two Important Questions.  Plus Common Wisdom.  And Simple is Good.

Now, we all know that the success of a startup business isn't as simple as following only one rule.  Entrepreneurs have to master a pretty long list of skills to do really well.  But some rules apply with more force than others, particularly at the beginning.  It's almost impossible to recover from a deeply flawed start.

So, remember, observe the simple RULE, or face certain doom. 

You can't say I didn't warn you.

@nametagscott goes for the throat!

Three Tweets from @nametagscott...

LET ME SUGGEST THIS: If your idea is your passion, but doesn’t have a viable market, you lose.

LET ME SUGGEST THIS: If your idea is intrinsically appealing, but something you suck at, you lose.

LET ME SUGGEST THIS: If your idea is sellable, but something you would hate doing for thirteen hours a day, you lose.

If you're an entrepreneur, or might-be entrepreneur, or wanna-be entrepreneur, and you haven't stumbled on @nametagscott, you're missing a great chance to be profitably uncomfortable.

Scott Ginsberg tries his best, and usually succeeds, to jolt people out of their warm, fuzzy places, and to enable them to take a fresh view of reality.  He's a little bit crazy, but that's what makes him memorable.  And he knows he's a little bit crazy.  That's what makes him effective.

A while back I posted about mental mildew, its effects, and some ways to combat it.  Where mental mildew is concerned, Scott and others of his ilk, are full strength Lysol.

So why did I pick these particular bon mots from among Scott's 3,569 tweets to date?  To be honest, they first caught my eye because they were all tweeted together, and had a nice symmetry of construction.  They were well-constructed from a presentation and persuasion standpoint.  (I said Scott was a little bit crazy.  I didn't say he hadn't mastered his craft.)  Once they had caught my eye, however, I noticed that they validated my own assertions for entrepreneurs.  That was flattering to old Jim Flowers, believe me.

Validated how, you ask?  Here's how. 

Scott, the Mentor, tweeted a set of three go-for-the-throat assertions that landed squarely on Market, Magic, and Moxie.  Yep!  Every successful startup involves a real market, not one the entrepreneur dreams up.  And the new company has to execute in a magical manner that sets it apart from the crowd.  And the founder give everything to the venture.  He has to outwork his competition.

Thanks, Scott.

There really isn't that much new stuff in the world of business.  But there can always be new ways of expressing the ancient truths.  And those new ways can provide moments of high insight to people who have been lulled to sleep by the old words and phrases.

Four ways to make sure your startup flops

"Fail fast.  Fail cheap.  Live to fight another day."

- Anonymous

Well, these four tips, if you follow them carefully, can almost guarantee that your startup business will fail.  Fast and cheap are always relative.

• Come late to the party.  It's scheduled for 8.  8:30 or 8:45 should be no problem.  You have plenty of time to wash the car before you get cleaned up.

You've probably managed to arrive late for a party at some time in your life.  I have.  What was it like?  See if this sounds familiar.

First, nobody notices that you have arrived.  The host is no longer hovering by the door to greet you.  All the timely guests have formed closed groups and are engaged in earnest conversation.  The best hors d' oeuvres are gone.  And everyone is at least one drink ahead of you. 

Palm Pre was late to the smartphone party.  Need I say more?

• Copy the most successful competitor.  It's the music that sells, not the band.  I have hundreds of CDs by bands I've never seen in person.

See if this is who you want to be.  I just grabbed it off the web.

"Almost Famous is one of the best cover bands around today. That's a bold statement, but it's exactly what you'll be saying after you experience one of their shows. With a completely fired-up & kickass stage show, Almost Famous combines pure hedonistic rock & roll debauchery with some of the most talented musicians in the NY Metro Area...the majority of whom have been signed to major labels or recorded & toured with major acts around the globe."

And now they're almost famous.  I'll bet they're almost rich, too.

And don't forget the all the rich Elvis impersonators.

• Don't sweat the details.   Attorneys and accountants are always crying wolf, just to grab some big fees.  Charge ahead.  You can always clean up any small messes later.  Right?

OOPS! 

"BlackBerry maker Research in Motion agreed to pay $612.5 million to patent holding company NTP to settle a long-running dispute that had threatened to shut down the popular wireless e-mail service for its 3 million users." Their PR team tried to spin that as a reasonable licensing fee.  Um hm.

And there was Enron, etc, etc.

• Don't try very hard.  After all, the libraries are full of biographies of famous people who became incredibly successful by dabbling in things on a part-time basis.

Yeah, right.

OK, I'll re-state the obvious, just in case. 

• Find a Market you can enter early, so you can ride the growth wave.

• Create some Magic that sets you apart from the ho-hum competition.

• Enlist a good batch of Mentors who can point out all the possible not-so-obvious pitfalls.

• And bring along enough Moxie to see you through the tough times that always come.

Seven-minute safety net for entrepreneurs

"All you need in this life is ignorance and confidence; then success is sure."

    Mark Twain

I sometimes wonder how far Mark Twain could jam his tongue into his cheek. 

Launching a business from a position of ignorance will not assure success.  That's obvious.  Entrepreneurs clearly have confidence.  It's part of what I call Moxie.  But they absolutely must avoid ignorance.  Duh.

Here's what I like to think Twain might have said, if he had been a business consultant, instead of one of the greatest humorists and social commentators of all time.

Your baby is ugly!

"The great tragedy of Science - the slaying of a beautiful hypothesis by an ugly fact."

Thomas H. Huxley

"In reality, just about all start-ups are ugly in the early days."

Dharmesh Shah

Encouraging entrepreneurs is a tricky business. 

It's a lot like parenting, as condescending as that may seem.  I say this because parents are advised to maintain clarity regarding the difference between the child herself and certain annoying, embarrassing, non-productive, and even anti-social behaviors. The child is not "bad."  The child is "naughty." I love you, sweetie, but that behavior has got to go, period.

The challenge for any parent or adviser is to encourage course changes without damaging the student's Moxie... and also to preserve your relationship at all costs.

For things to change in any real sense, the difficult child must be presented with information that leads her to draw a fresh set of conclusions about the results of behaviors on her own.  

So much for my challenges as an adviser to entrepreneurs.  Here's one for you Mr. Entrepreneur. 

Please ask yourself, regularly and honestly, "Is my baby ugly?"  Have I dreamed myself a Market opportunity instead of actually finding one?  Does my response to the perceived Market need really constitute Magic?  Or is it just a me-too?  Which of my fundamental assumptions carries the lowest confidence factor?  What simple tweak in my plan would gain me the most leverage?

Every swan, said Hans Christian Andersen, begins as an ugly duckling.  And Dharmesh Shah counsels,

Accept That Your Baby Is Ugly:  Just like most parents think they have beautiful babies, most entrepreneurs think they have beautiful start-ups.  In reality, just about all start-ups are ugly in the early days.  Don’t spend time trying to explain to others why your start-up baby is beautiful.  It’s not.  Instead, spend energy explaining why your baby is going to grow up  into something that’s beautiful. 

So, if you're feeling adventuresome and self-confident, try something new today.  Re-visit every one of your key assumptions about market size, end-user needs, competitive behavior, advertising effectiveness, contracting systems, manufacturing quality control, raw material costs, and so on.  Assume that at least part of your baby could benefit from some plastic surgery.

Ask yourself: how much of my plan's beauty is in only the eye of this beholder - me?

Spells and Incantations

"We are generally the better persuaded by the reasons we discover ourselves than by those given to us by others."

Blaise Pascal

"You can't convince anybody of anything.  You can only give them more information."

Arthur Scharff

If your start-up plan includes exceptional Magic, you have a fighting chance for survival.  But simple possession of Magic does not put your wizardry into action.  It must be released and directed by means of carefully crafted spells and incantations.  Powerful Messages are always required.

My experience tells me that engaging the listener as an informed decision-maker is more powerful than ordering the listener to take some particular action.  That is not to say that marketing and advertising messages should be limited somehow to cold, industrial-strength facts.  Au contrere!  We have all been informed that buyers act on expectations of feelings.  So, informing them that others have, in fact and regularly, experienced those feelings by taking the desired actions is a classic strategem.  Testimonials work.

It's also perfectly acceptable, and logically important, to lead your listener/decision-maker to your preferred conclusion.  I've quoted Barry A. Densa before.  Here's a portion of what he says...

Assemble and present your credentialing elements, your evidence–your entire body of incontrovertible proof–in clear and linear fashion.

Allow your proof to lay the groundwork for what is to come. Create strong and overwhelming direction and momentum.

So, my friendly local entrepreneur, it would appear that Mastery of the art of incantation will serve you well. Click here for a comprehensive list of spells revealed in the Harry Potter tales.  Or, check out the advice of the various marketing communication wizards available to you, at no cost, courtesy of the world wide web.  Above all, start with good writing.  That is your personal magic wand.

The Century of the Entrepreneur

"You can carve this in stone: the 21st century is the Century of the Entrepreneur. And the world is a better place as a result!"

Jim Blasingame

A few years back Jim Blasingame declared that we were entering the "century of the entrepreneur."  He listed four principal factors contributing to his conclusion: rapid advances in technology; an expanding view of market risk as exciting; a cultural shift in the definition of an appropriate work venue, with home now included; and broader public understanding of the power of equity participation.

Now, only ten years into the new century, we find ourselves in the midst of global turmoil.  Equity markets are undergoing major re-structuring.  Traditional weather patterns are now unreliable, disrupted by climate shift; and famine lurks.  Political and religious unrest abounds,including organized terrorism.  Piracy is most definitely back.  Yikes!

Was Blasingame wrong?

No, he was absolutely correct; but I'd like to offer a handful of of amendments to his list of entrepreneurship accelerators to be considered.

Technology shifts clearly stay at the head of the class.  Some specifics, however, are worthy of note.  In the industrial 20th century the ability to communicate globally began at near zero, but ended at universally available at almost no cost.  A business necessity that once demanded large corporations with economies of scale is now available to you and me, from any location.  And, on top of that, modest quantities of just about any product can now be economically transported around the globe in hours or days.

There are also some additional, less visible, but quite powerful, changes in the entrepreneurial landscape.  For example, computer-assisted design and manufacturing advances have radically reduced the time and cost of creating new products.   Once again, the scale factors required of 20th century industrial giants have been made available to individuals and small enterprises.  And the internet.  Ah, the internet.  Cheap marketing and advertising resources have never been so accessible.

BUT, the increasing cost of energy for transportation is driving many types of production, once centralized for economies of scale and moved around the world chasing cheap labor, to be re-de-centralized to be nearer to supplies of raw material and/or consumer markets.  (Sorry about the double hyphenation.  It just seems right, but only this once, of course.)  This is particularly evident in emerging trends in food production. Decentralization implies smaller units of production, which translates into the opportunity for entrepreneurial entries into markets formerly dominated by large organizations.  Global distribution of centrally, mass-produced goods (which was essentially a 20th century invention) is already falling out of favor, for straightforward energy cost reasons.

Risk is, of course, as Blasingame pointed out, exciting.  But it's still risk.  However, the recent economic shakeout definitely changed the relative attractiveness of entrepreneurship.  It suddenly became less risky.  What?  Yes.  Those stable, secure jobs in large industrial and financial institutions just aren't as secure as they once seemed.  The relative risk of personal entrepreneurship as compared to traditional employment options has been drastically reduced.  Which is better: being at risk and in the dark; or being at risk and calling the shots?

So, the 21st century entrepreneur can design and produce sophisticated products as quickly and cheaply as a large company, communicate with clients instantly, anywhere, and transport goods in small quantities on a global scale, all at a lower relative personal risk than ever before.

The Market is there.  The ability to perform Magic is more widely available than ever before.  If you have the Moxie, go find some solid Mentors, and give entrepreneurship a try.  Jim Flowers agrees with Jim Blasingame.  This is most definitely the century of the entrepreneur.  And making the world a better place should be a piece of cake.  There's unbelievable room for improvement.

Here's to the crazy ones...

Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

    Steve Jobs

Some people never go crazy. What truly horrible lives they must lead.

    Charles Bukowski

Part of being sane, is being a little bit crazy.

    Janet Long

Do something. If it doesn't work, do something else. No idea is too crazy.

    Jim Hightower

You have to forget about what other people say; when you're supposed to die, when you're supposed to be lovin'. You have to forget about all these things. You have to go on and be crazy. Craziness is like heaven.

    Jimi Hendrix

Some (maybe most) people don't understand MOXIE.  They shake their heads in disbelief when apparently intelligent, clear-thinking people decide to chase entrepreneurial dreams instead of finding good jobs that promise stability and security. 

This presents a special problem for all you start-up founders.  Not only must you identify and overcome all the obvious business challenges, you must also deal with all the skeptics among your friends, family, and the investment community.  All too often they fail to understand that you only look crazy - from their perspective, certainly not from yours. 

Sometimes they're right, though.  So it's not crazy to do one more re-check of the data, one more test of your assumptions.  Make sure you're intelligently audacious, not actually crazy.

Are you attacking a real Market, not one you have imagined?  Do you have some powerful Magic that will attract spell-bound clients?  Have you surrounded yourself with seasoned Mentors who can provide the information and perspective that you lack?

If your business concept can pass the Four Fundamental Factors test, you might even be able to convince the skeptics.  And sometimes the Magic really works.

And that's when Jimi is absolutely right.  "Craziness is like heaven."

Experts Agree. Best MOXIE Posts of 2009.

The polls are closed.  The readers have spoken.

The most popular, and presumably most useful, MOXIE posts from the past year are presented below.

1. How to eat a five hundred pound marshmallow.

The vast gorge that lies between noble intent and significant achievement is, of course, quite real, and widely documented.  Lofty goals are commonplace.  Noteworthy achievement?  Not so much.  And this is particularly true for entrepreneurs and their ambitious startup plans.  (More...)

2. Four really useful habits.

I'm pretty darned sure that these four things will take most anybody a long way down the road to achievement and contentment: clarity of vision, commitment to relevant action, adherence to noble principles, and focus.  (More...)

3. Success - Ten Traits Supporting Four Fundamental Factors.

"Success or failure of a new venture is determined very early, on the strength or weakness of only a few fundamental factors, four to be exact.  Those four factors are Moxie, Market, Magic, and Mentors."  (More...)

4. I'm not losing.  I'm learning.

For a scientist, an experiment that does not confirm the hypothesis is not a failure.  It is a useful stepping stone to a fresh hypothesis.  For a musician, a bad review provides clarity on how the performance can be improved.  For an entrepreneur, a rejected product is a clear message about the true needs of the marketplace.  (More...)

5. Secret Revealed!  How to Get What You Want...

One of the most common reasons given for pursuit of entrepreneurship is the need for autonomy, the need to be in charge.  Over and over again, unfortunately, I meet people who have become slaves to the businesses that were supposed to give them freedom.  That's just plain sad.  (More...)

6. The inconvenient truth about competitors.

A sadly pervasive startup mistake is the presumption that a market leader will not react forcefully or cleverly to the entry of a fresh competitor - or that there will not be yet another entrant, complicating the situation even further.  (More...)

Start-up Success - Four Fundamental Factors

I've been hanging around start-ups for a while - roughly forty years and counting.  Over that time the information I've collected has clustered together to convince me of three things. 

1. Success or failure of a new venture is largely determined very early on the strength or weakness of only a few fundamental factors, four, to be exact.

2. Those four factors are Market, Magic, Moxie, and Mentors.  If these are not "right", nothing else really matters.  It's not that a business with some weaknesses in these areas can't survive; but it's highly unlikely that it will flourish.

3. The most important of these factors is Moxie - the energy, conviction, and determination of the founder/entrepreneur, the leader.

There are always noteworthy exceptions to rules of thumb; but the fact that they are noteworthy means that the general rules are reasonably valid.

I test business concepts proposed to me on those Four Fundamental Factors; and I encourage potential entrepreneurs to test themselves in the same manner.  Similar encouragement applies to people considering association with early stage businesses - employees, investors, strategic allies, clients.

And I always, always look first to the fire behind the eyes of the leader.  I always START WITH MOXIE.

You can test your own entrepreneurial ideas against the Four Fundamental Factors by using my simple Four Factors Self-Check.

You can also watch and listen to me talk about all this on YouTube. 

I know who grows my arugula

"Each man takes care that his neighbor shall not cheat him. But a day comes when he begins to care that he does not cheat his neighbor. Then all goes well -- he has changed his market-cart into a chariot of the sun."  

    Ralph Waldo Emerson

Gwynn Hamilton and Robert Webster grow food for my family.  They garden at the Stonecrop Farm in Newport, Virginia, with the faithful assistance of their five-year-old daughter, Zoe. 

We always stop at their booth at the Blacksburg Farmers' Market.  They know our names, remember what we like, and apologize when we arrive late and they have sold out of our favorite, arugula.  But they definitely are not our private gardeners.  It's quite clear even to a casual observer that they genuinely care about all their customers, not just us.  And to reciprocate that caring, by being a friendly and faithful repeat buyer, just comes naturally.

What if each business relationship had that depth, that warmth?  World peace would be within our reach.  I'm sure of it.  Swords would become plowshares, no question.

Every entrepreneur makes a choice as to how to relate to clients.  The seller/buyer interaction is part of each business's Magic formula.  And I am convinced that people prefer to do business with other people, rather than with machines or systems.  There is intrinsic human value in community, even when the individual relationships are digitally enhanced.

It's not easy for a global company to create local relationships.  But it's not impossible.  Wal-Mart is not required to employ smiling greeters.  Rackspace is not required to provide "fanatical support" from pop-up, human "rackers."

So, I offer you this simple strategic consideration for 2010.

As the New Year emerges, fresh life rising from the composted past, I challenge myself, and you as well, to seize the opportunity to beat at least one sword into a plowshare, to change one humble market-cart into a warm and radiant chariot of the sun.

I'm not losing. I'm learning.

"Life is like playing a violin in public and learning the instrument as one goes on."

    Samuel Butler

Breaking news.  You heard it here first!  Unskilled violinists don't receive much applause.  And off-target products and services don't sell. 

So, what happens to the aspiring violinist who cannot move his audience?  What happens to the entrepreneur whose first product flops?

My son is a musician.  His career choice has exposed me to all sorts of people and situations that would have otherwise been forever hidden from me.  A few years ago, we were visiting a college as part of the audition tour required of every music major.  During such visits the aspiring performer is interviewed and then demonstrates his skill for the professors who will be charged with transforming him into a reliable applause generator.  The parents wait in the hall.

The halls of these music institutes are festooned with all sorts of flashy concert posters and album ads, of course.  But they are also home to a wealth of inspirational materials.  Here is a keeper.

"Amateurs practice until they get it right.  Professionals practice until they can't get it wrong."

Wannabee entrepreneurs (and musicians) try only until they hit the first serious obstacle.  Then they lose, precisely because they believe they are losing. 

Winners keep at it until they succeed.  They win because they understand that they are not losing, but that they are learning.

For a scientist, an experiment that does not confirm the hypothesis is not a failure.  It is a useful stepping stone to a fresh hypothesis.  For a musician, a bad review provides clarity on how the performance can be improved.  For an entrepreneur, a rejected product is a clear message about the true needs of the marketplace.

Product acceptance is disappointing?  You have two choices.  Declare defeat and go find a job.  Or address the current biggest complaint and try again.  Then repeat the cycle as long as your Moxie holds out.

Ultimately, you will learn so much about your Market that you can't get it wrong.  You will have mastered your Magic.

By the way, the musicians and the scientists all have Mentors.  They are built into the system.  I'm just saying...

The inconvenient truth about competitors

Competitors are generally smarter than you wish they were.

If you haven't seen the movie Butch Cassidy and the Sundance Kid, picture this. 

Two intrepid, highly creative entrepreneurs of the late 19th century have annoyed their competitors.  The entrepreneurs are, in fact, notorious train robbers; and the competitors are professional security agents engaged to bring them to justice.  The entrepreneurs are trying to outrun their pursuers in the high desert of the American Southwest.  They just can't shake the skillful and persistent agents.  They are cornered.

Butch Cassidy: They can't track us over rocks.

Sundance Kid: Tell them that.

Butch Cassidy: I couldn't do that. Could you do that? Why can they do it? Who are those guys?

                                                Butch Cassidy and the Sundance Kid, 1969

When Butch and Sundance concocted the business plan for their gang, the Wild Bunch, they fell into a very common trap.  They underestimated the competition.  They thought they were up against small town sheriffs and civilian deputies.  With the element of surprise, strength of numbers, and better horses, they could swoop in, rob the train or the bank, and be practically un-catchable.

Then the railroads changed the game.  They hired the Pinkerton Agency to destroy the Wild Bunch.  The Pinkerton professionals could ride the best horses, hire expert trackers, and assemble awesome firepower.

By some accounts, Butch and Sundance stole over half a million dollars before they were forced to flee to South America.  There are differing versions of their final days; but they most certainly did not die peacefully.

A sadly pervasive startup Mistake is the presumption that a market leader will not react forcefully or cleverly to the entry of a fresh competitor - or that there will not be yet another entrant, complicating the situation even further.

The initial Market advantage provided by your Magic can evaporate almost instantly as a result of defensive action by the previous owner of your customers, or by the appearance of something even more magical that defeats you both.  Failure to consider this inconvenient truth can easily result in your untimely demise.

Ouch!

P.S.

The movie is really worth watching, by the way.  Here's one reviewer's comment.

"Calling Butch Cassidy and the Sundance Kid a great Western is like calling Dom Perignon a really great bottle of grape juice. Yeah, that's correct, but you're missing the point entirely."

Christopher Null, 2006