So you want to launch a business...

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. 

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.

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.

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

Scratch where it itches.

"I have a simple philosophy. Fill what's empty. Empty what's full. And scratch where it itches."

                                                       Alice Roosevelt Longworth

And do those things in such as way as to make everyone desire that you be the filler, the emptier, and the scratcher, both now and in the future.

Observe these practices and you will reasonably assure that you have a powerful core strategy for your startup business.  You will very likely master both Market and Magic, two of the Four Fundamental Factors required for entrepreneurial success.

Of course, you will still need a lifetime supply of Moxie and many, many Mentors.

Think about this one more time, please.  "Scratch where it itches."  How could that be more obvious?  And yet, so often, I meet aspiring tycoons who clearly demand that the marketplace learn to itch where they prefer to scratch.  They want to sell better mousetraps to people who aren't troubled by mice.  They fall in love with their inventions and are blinded by that passion.

Clear, reliable market knowledge is absolutely essential to successful entrepreneurship.  Without that any startup is gambling on hunches, rather than investing in opportunities.

A substantial fraction of all house fires begin on the stove top.  Wouldn't it be smart to install an automatic fire extinguisher in your range hood?  That seems logical at first blush.  But the risk is perceived as low by almost all consumers.  These devices exist and do not sell well at all.  In fact, how many of us even bother to keep a fire extinguisher in our homes?  We install smoke detectors, but don't bother with fire extinguishers.  Go figure.

But truth is truth, after all.  No itch?  Don't bother to scratch.

Success - Ten Traits Supporting Four Fundamental Factors

"Innovation is the specific instrument of entrepreneurship."

                                                                        - Peter Drucker

"I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance."

                                                                        - Steve Jobs

"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."

                                                                        - Jim Flowers

Entrepreneurship definitely does not equal innovation, but they sure do complement each other in powerful ways.

Here are some behaviors/traits/skills that support innovation, according to Professors Jeff Dyer of Brigham Young University and Hal Gregersen of Insead...

• Associating - a cognitive skill that supports connections across seemingly unrelated questions, problems, or ideas.
• Questioning - an inclination to ask "what if", "why", and "why not" questions that challenge the status quo and open up the bigger picture.
• Observing - the propensity to closely observe details, particularly the details of people's behavior.
• Experimenting - regularly trying on new experiences and exploring new worlds.
• Networking - connecting with smart people who have little in common with them, but from whom they can learn.

These do not match up well with the various lists of entrepreneurial traits that pop up in online investigation of the topic.  Recurring themes in definitions of an entrepreneur include...

• Clarity - true entrepreneurs absolutely "know" where they are headed.
• Focus - successful entrepreneurs stay on task - period.
• Persistence - they refuse to give up. 
• Self-confidence - they never doubt their ability to succeed.
• Courage - they take risks that most others would not take.

These entrepreneurial traits may be applied to an innovative vision, to be sure.  Apple, for example, was both innovative and entrepreneurial.  They may also be applied, on the other hand, to a perfectly common vision, such as opening a snack bar or an auto repair shop.

My simple-minded shorthand for all the entrepreneurial traits is MOXIE.  And the innovative traits relate directly to the other three Fundamental Factors: Market, Magic, and Mentors.

The Simple Secret of Strong Brand Identity

"Almost all absurdity of conduct arises from the imitation of those whom we cannot resemble."

     Samuel Johnson

"Always be a first-rate version of yourself, instead of a second-rate version of somebody else."

Judy Garland

Branding expert, Alina Wheeler, relates those personal exhortations to corporate branding. 

"In psychology, authenticity refers to self-knowledge and making the right decisions for the right reasons. In branding, companies who know they are, what they stand for, and how they are different, have a competitive advantage."

The secret really is a simple one.  Nobody remembers the imitator.  They remember the original.  Be original, and make your originality obvious to the world!

Three things to know about salespeople

"No computer network with pretty graphics can ever replace the salespeople that make our society work."

                                                                                         Clifford Stoll

My friend and fellow blogger, Anne Clelland, reminded me recently that I had asserted a universal truth about salespeople.  She challenged me to post it so others might refute me, so here it is (Rule Number Two, below), and more.  Comments are open.  I'd love to hear your opinions.

There are exceptions to the following rules, I'm sure, but not very many IMHO.  I'm willing to risk stating them in boldface type; but I've done dumb stuff before.  Here goes...

Number One:  For purchases that involve personal risk of any sort, people prefer to buy from other people.  Personal risk takes a variety of forms, of course.  The cost of the item relative to the financial resources of the buyer is almost always a discriminating factor.  The look and feel of a publicly visible item as compared to the buyer's self-image also plays a part.  And so on.  The point is this.  Buyers want to trust an actual person to be selling something that will not harm or seriously disappoint them.  And they want someone to blame if the deal goes sour.

For most prospective entrepreneurs this means that you probably have a human sales force in your future.  Given that, I recommend that you pay close attention to the other two rules.

Number Two:  Commission salespeople are perfect optimizers of dollars per working hour.  They all adopt behaviors that maximize their income for whatever time they choose to invest.  If they sell multiple products, they will bias their energy toward the ones that have the highest potential return to them.  Salespeople who do not act in this manner commonly find it useful to make fresh career choices.

The bias of the sales force is useful information for you, the business owner.  If your sales force ignores one of your products, it is probably a dog, or at least badly priced.  Or the commission rate is too low.  Or the sales cycle is too long.

By the way, any salesperson who is not on some sort of commission is really just an order taker, and should actually be replaced by a "computer network with pretty graphics."

Number Three:  Commission salespeople typically do not maximize their total income.  Unlike teenagers at a pizza buffet, they stop when they are full.  They do follow Rule Number Two and maximize dollars per hour invested in selling.  But when they have made "enough" money, they take off and play golf.  The definition of "enough" varies widely, of course; but the phenomenon is real.  They want the time on the golf course more than they want the extra money.  Behavioral psychologists call it satisficing.  They are maximizing their happiness per hour.

Some companies fight the golf option by increasing the commission rates at higher levels of sales.  Others simply accept it and hire additional salespeople. 

So - what do you think?  Have you observed these same behaviors?

Intelligent audacity

"You sort of start thinking anything's possible if you've got enough nerve."   

J. K. Rowling, Harry Potter and the Order of the Phoenix

"Hearing voices no one else can hear isn't a good sign, even in the wizarding world."

J. K. Rowling, Harry Potter and The Chamber of Secrets

A few days ago, a good friend of mine shared his take on Moxie.  He agreed that energy, pep, determination, and perseverance were all part of the formula.  But to him, two more words belonged on the list.  Successful entrepreneurs, he said, demonstrate "intelligent audacity."

Intelligent audacity.

In Potter terms, a successful entrepreneur (often a wizard of a sort), having an abundance of nerve, will often believe that "anything's possible."  That's audacity.  But it is also vital for that entrepreneur to stay in touch with reality.  That's intelligent, obviously.  Because as Old Lodge Skins said in the movie Little Big Man, "Sometimes the Magic works.  Sometimes it doesn't."

So, as you prepare to startup your business, step back for a moment.  Is your plan audacious?  Probably, I would guess.  Is it also intelligent?  Or are you hearing voices no one else can hear?

Hmmmm.

Price and Value

"It's not enough to create magic. You have to create a price for magic, too."

                                                Eric A. Burns

I love this quotation, of course, because it addresses the value of Magic, one of the Four Fundamental Factors governing the success of a business launch.  Every entrepreneur has to make some magic, and that magic must deliver substantial value.  It is one of the supreme challenges of entrepreneurship to attach a price to that value, to position the Magic financially so that it results in both a sale and a profit.  Over-price and there's no sale.  Under-price and there's no profit.  Deliver real value and you have a happy customer.

On January 13, 1981, I, Jim Flowers, solemnly vowed that I had taken my final lukewarm shower. 

At the time I owned an old house with galvanized iron water pipes.  For those of you who have never dealt with old plumbing, iron pipes rust on the inside.  Eventually that rust constricts the flow of water, often to a mere trickle.  That's truly annoying, especially in the winter, when a hot shower is like a first-class ticket to heaven.

I searched out (pre-internet, mind you) and engaged a free-lance plumber who vowed vast experience with old piping.  He looked at the location of my second floor bath, went to the basement, and quietly surveyed the various lines running from the hot water heater.  After what seemed like only a few moments, he reached up and tapped on one of the pipes with a wrench, not hard at all, just four or five gentle taps.

"Please go upstairs and try your hot water now," he said quietly.

I returned to report free flow of nice, hot water.  "OK," he chuckled.  "That will be $75."

In 1981 $75 was serious money, especially for 5 minutes of work.  Charging $75 for 5 minutes work took a lot of Moxie.  As I did an obvious double-take, he added, with a broad grin, "That's $5 for my time, and $70 for knowing where to tap.  Enjoy your shower tomorrow morning."

I nodded and cheerfully wrote out the check.  To tell the truth, I'd have been happy to pay much, much more.

Oh, and by the way...  The shower was fantastic!!

Ignorance is risk

"Ignorance gives one a large range of probabilities."

                      George Eliot

"Nothing is worse than active ignorance."

                                             Johann Wolfgang von Goethe

"Never let your persistence and passion turn into stubbornness and ignorance."            

                                Anthony J. D'Angelo

To be an entrepreneur is, by definition, to risk.  Risk management is all about reducing uncertainty, somehow minimizing the number of possible outcomes.  There is no greater risk, therefore, than to take aggressive action in the face of serious uncertainty.

To translate that into the terms I commonly use in this blog - don't let your Moxie override your Mastery of Market and Magic.

Here's a simple test for the level of ignorance-risk inherent in your startup plan. 

• Are you entering a Market in which you have never done business?  Yes or No.

• Is your Magic (product or service) something truly new to the world?  Yes or No.

"Yes" answers suggest that your Mastery of the Market or the Magic are probably questionable.  Two "yes" answers suggests very high risk.  One "yes" suggests more moderate risk. 

Good news!  Ignorance can be corrected, starting with location and recruitment of Mentors who have deep personal knowledge of your Market and/or your Magic.

The first day of the tournament

"You can't win a golf tournament on the first day, but you can definitely lose it."

Anonymous

Tiger Woods reinforced this old saying last week.  The four shots he surrendered to par in a four hole stretch in the first round of the PGA Championship cost him a finishing round tie and a chance to win.

The same holds true for starting a business.  You can't guarantee success at the beginning; but you can certainly make failure very, very likely.

How, you ask?

By falling short on one or more of the Four Fundamental Factors: Market, Magic, Mentors, or Moxie.

In the Market area, you can select a target group with little or no built-in growth potential.  Or you can fail to address a truly compelling need or want.

If your product carries no Magic, is not unique or powerful in some way, no one will notice anyway.

Mentors provide a wealth of information that will enable you to lower risk at every turn.  Without them you are totally on your own - not a good idea.

And finally, there's the Moxie.  Ah, the Moxie.  Without a generous supply of it, you will most likely just give up.  You will surrender.  The challenge will cease to excite you and will instead wear you down and then defeat you.

If you are thinking about launching a business, it's the first day of your big tournament.  Put yourself in a position to win!  Review your chances right now.

Magic, Mutuality, and Moxie

"Good ideas alter the power balance in relationships, that is why good ideas are always initially resisted. Good ideas come with a heavy burden. Which is why so few people have them. So few people can handle it."

Hugh Macleod

"Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others."

    Peter Farquharson

It's really tough to work your Magic on a Market, even one with a truly compelling need of some sort.  There's typically somebody who stands to lose when you win.  In the strange and wonderful world of business writing, we most often call those losers competitors or substitutes.  But, to be honest, that's a bit too simple and obvious to deserve any extended commentary.  There are, however, other important groups of potential losers that should be considered by innovative entrepreneurs.  They are lurking in the bushes waiting to derail your magical train.

Take, for example, suppliers to the competitors.  If your entry stands to hurt them, they will work against you.  Period.

And what about distributors of the competitors' products?  Same story.

And, horror of all horrors, individual customers may be personally wedded to the competitor by a bond forged in the "old" technology.  The internal client expert may have bet his or her career on your competitor's product line.  To switch to yours may invalidate a lifetime of subject-matter-expertise.

What to do?  These impediments to your success cannot simply be overwhelmed by your Moxie.

Build relationships with them.  Align with the potential losers.  Figure out how to make them winners, too.  Use your competitor's supplier.  Make a sweet deal with his distributors.  Transform the internal technical gatekeeper into an expert in your technology.

In a complex, competitive environment it's well-nigh impossible to make everyone into a winner.  But you can quite often prevent some of them from being losers.  That frees you to focus your Moxie on your strategic center.

“Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.”

Niccolo Machiavelli

One deal at a time...

"In the modern world of business, it is useless to be a creative original thinker unless you can also sell what you create. Management cannot be expected to recognize a good idea unless it is presented to them by a good salesman."
                                                                                                        David M. Ogilvy

Please, please, never count on capturing 5% of the Market.  There is no such thing as 5% of a market, any market.  Market share is just a convenient way of counting up many, many individual transactions.  And each transaction proceeds (or does not proceed) according to its own unique set of parameters.

The most puzzling and challenging of those parameters is the set of people who are party to the deal.  And the person who figures out how to make all those parties come to agreement is called a salesman.

Figure out how to facilitate many transactions and you will be known far and wide as a rainmaker.

And true rainmakers never forget that every deal is a new one.

Motivation matters!

"We are told that talent creates its own opportunities. But it sometimes seems that intense desire creates not only its own opportunities, but its own talents."

                                                                                                    Eric Hoffer

Prospective business founders often worry about protecting their inventions.  They fear that someone will steal their idea and beat them to the payoff.  I do my best to assure them that they are much safer than they suppose.

That something can be done does not mean that it should be done.  And it most certainly does not assure that it will be done.  I think it is safe to assert that people attempt difficult actions only under the most compelling circumstances.  And starting a business qualifies as a difficult action.  That's just plain true.  You can look it up.

My experience told me long ago (Yes, I'm getting on in years.) that most people lack the MOXIE to take action even on their own greatest ideas.  So, by logical extension, I never fear that someone might pilfer my creative thoughts and act on them. 

Ideas do not automatically transform themselves into financial success.  What really matters is the motivation that fuels the MOXIE that delivers the energy and persistence required to turn ideas into actions that ultimately create value for a client.  (Wow, that's a long sentence.  I'll get some heat for that from Mr. Clarity.)

And, never forget, even with lots of MOXIE, you still have to address a real Market with some powerful Magic and the wisdom of any number of solid Mentors.