So you want to launch a business...

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Note:  The following anecdote is an excerpt from "Guests at the MOXIE Hotel," an unpublished, anonymous, hand-written manuscript found under a pile of ancient National Geographic magazines in a rundown beach cottage on the Oregon coast.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.

The single most important question an entrepreneur can ask...

"Who can I help?"

Yes.  It's that simple.

But, of course, it's not really simple at all.  That short question is loaded with hidden meaning.  For starters: who is who?  That little three letter word demands of you, the entrepreneur, a clear definition of your market target group.  What combination of population and situation creates the fertile ground into which you can successfully plant the seed of your startup business?  What Market can you enter early, so you have the opportunity to ride its natural growth curve?

And once you've figured out who who is, you'll have to put some thought into what help means.  What does who really need or want?  Remember, it doesn't matter how much you think who ought to need or want something.  Listen to your Market.  It will tell you what it needs or wants.  Your opinion, based on amazingly profound personal insight, really doesn't count, not one iota.  Sure, that hurts.  Get over it!

What's really cool is that the simple question, "who can I help," is not only vitally important in your business.  It's also vitally important in your life.  To be dedicated to helping is not only profitable, it is noble.  And, last time I checked, noble is a good thing.

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

                                                       Alice Roosevelt Longworth

"I came to realize that life lived to help others is the only one that matters and that it is my duty...This is my highest and best use as a human."   

Ben Stein

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.

What is a spin-out, anyway?

Question from a reader: What is a spin-out?  I've heard the term, but I'm not sure what it really is. 

In physical terms, a spin-out occurs when centrifugal force overpowers whatever is connecting a rotating object to some central hub.  The power acting to make the object independent is stronger than the power constraining it within the existing system.  Objects would fly off the earth, for instance, if the earth were spinning fast enough to cancel the power of gravity.

In business, a spin-out is a new corporate entity formed to exploit some opportunity that is not directly aligned with the core business of the parent organization out from which it is spinning.  (Pretty good, huh?  Only an English major could construct a sentence like that.) 

Not all spin-outs become free-standing enterprises.  The new entity might be set up as a “division” of the parent, rather than a totally  independent company; but it is managed independently as a consequence of its differences from the parent.  Typically, the defining difference is a new marketplace or target demographic, for which the parent provides no economies of scale or special knowledge.

New market.  New buyer group.  New business model.   Spin-out. 

Notice I didn't include "new manufacturing technology."  A new manufacturing technology that improves profitability will not typically trigger a spin-out.

I also did not include "new ways to address the needs of the customer."  Once you have customers, you should always be working on new ways to address their needs.  Otherwise, you will surrender them to competitors who manage to do just that.

Spin-outs are appropriate when there is a truly fresh market opportunity, a chance to serve a different batch of end users, with its own particular compelling needs.

Sometimes the spin-outs continue to take advantage of some "commodity" parenting services, such as accounting, payroll, or central computing power.  Typically, however, they do not share marketing and sales staff because of the clear market differences that caused the spin-out in the first place.

I hope that helps.

@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.

How big is big?

Question from a reader: A big company wants to sell my flagship product under private label.  How can I be certain that I'm getting a fair deal?

Short answer - you probably can't.  But - it doesn't have to be a fair deal to be a good deal.  That is a useful distinction that is often overlooked.

I'm reminded of the good old story of Steve and Charlie haggling over the price of a fish.  (I love good old stories.)  "I'll give you $5", said Charlie.  "Not a penny less than $9," replied Steve.  "$6," said Charlie.  "$8," Steve replied.  And, of course, they settled on $7.  As they parted Charlie called out, "Ha, I would have paid $10."  Not to be outdone, Steve's response was, "Ha, yourself.  I would have let it go for $3."

So, how hungry was Charlie?  How badly did Steve need fast money?  How much pride was at stake?  Was it Steve's first sale of the day or his last?  Was the fish really fresh?  Aaagh.  In the face of so much uncertainty, how can we ever define fair?

Only one thing is totally clear from the story.  Once Charlie offered to pay $5, the price was never going lower.  If Steve had spoken first and offered to sell at $5, the price would never have gone higher.

The various surrounding circumstances are not clear in the fish story; but in your own story you have the opportunity, in fact a personal obligation, to ferret out as much information as possible about the marketplace and your prospective customer.  Why, for instance, the big company wants your product is a key determinant of deal goodness to them.  They may be adding it for strategic positioning, rather than for the direct profit it might generate.  If so, they will likely pay a premium.

The same logic holds on your side of the transaction.  If you're doing fine without the proposed deal, you are in a position to hold out for a higher price.  But if that drives the big guy to do a similar deal with your chief competitor, you might be in serious trouble later.  Hmmm.

It's easy to say that it's all about the money.  But others say that timing is everything.  Etc.  Etc.  And so on.

You may never know whether a deal is fair.  But there are plenty of ways to make reasonably certain that the deal is good, at least for you and your business.

I recommend Jim Camp's book on negotiating - Start with No.  Go to the web, or to a bookstore.  Look it over.  If it's a good deal, buy it, whether it's a fair deal or not.

NOTE:  If you have a question, just email it to me, Jim Flowers, jimflowers@startwithmoxie.com. 

                                                                                                                                                   

Market: a flat globe with lumps on it

The world may indeed be flatter than it once was; but it's still roughly spherical; and it's definitely lumpy.  Just ask the "experts."

Back in 2005,Thomas Friedman, borrowing a term from Nandan Nilekani, declared the modern economic world to be flat.  The phrase is short and catchy.  Accurate or not, it definitely caught on.

Nobel laureate Joseph Stiglitz disagreed.  In Making Globalization Work, he argued that globalization unreasonably favors the already affluent developed countries, making them even more powerful.  And the "Americanization" of the globe is creating backlash against loss of cultural identity and local autonomy.

Meanwhile, Richard Florida (the Creative Class guy) says the world is "spiky."  He asserts that centers of innovative power, such as Silicon Valley, Austin, Bangalore, Dublin, and Stockholm can be expected to dominate economic growth in the near-term, and perhaps beyond.

So - who is right?  And what does all this mean for a prospective entrepreneur?  Consider this...

"The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth."

    Niels Bohr

Personally, I think there is value in all three of the above arguments, and that any of them taken alone is clearly insufficient to explain what I can observe of the world. 

So, my friendly entrepreneur, what this means is that dependence upon any single analysis of the world is likely to be dangerous for your start-up business.  And the warning applies not only to views of the entire global economic system, but also to local, regional, or national systems.  And it is valid for tight niches of specialized end-users, too.

It is really, really tough to be correct, let alone profound.  In fact, in the realm of the know-able, it is well-nigh impossible.  There is too much to know.  The good news is that entrepreneurs don't have to be profound, or even correct. 

True entrepreneurs - like you - have two great advantages over mere mortals.  You have high tolerance for uncertainty, the uncanny ability to manage risk.  And, being non-dogmatic, you can revise your plans as new information becomes available over time.

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?

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'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 market is always right.

"Slang is a language that rolls up its sleeves, spits on its hands and goes to work."   

Carl Sandburg

I confess.  I'm a language snob.  It wasn't a conscious choice, though.  I'm not a bad person.  Really.  Honestly.  It just happened somehow along the way.  And since neither of my parents even finished high school, I can't blame it on them.  Some cruel twist of fate doomed me to bristle at minor violations of the countless rules of grammar and proper usage.

Consider bring and take.  This is simple enough, isn't it?  You "bring" to where you are.  You "take" to where you are going.  If I am at the office, I may logically speak about "bringing" my lunch to work.  But if I am at home, it is just plain wrong to say that I am planning to "bring" that feast to my desk the next day.  Didn't everyone learn that in the second grade?  Or earlier?  No, you say?  Damn!

A couple of years ago I preached this particular sermon in the presence of a professor of linguistics.  She politely, but firmly, told me that the language was alive, and had always been alive, and that I would  have to (in her words) just get over it.

As you may have guessed by now, I have not completely succeeded in putting her advice into practice.  I have, however, found a powerful corollary in the world of entrepreneurship that I can comfortably preach to you. 

The universe might have been "just so" last year, or last month; but it is alive, and is different today.  That may be inconvenient for you.  Your plan for market domination may now be weakened, or even ruined, as a result.  But you cannot simply object and indignantly demand that it not be so.  You are required to adapt. You absolutely must  "just get over it."

Whether it is startup of a fresh competitor, or a scientific breakthrough, or wild fluctuations in the price of crude oil, the message from the marketplace must be heeded.  Stubborn persistence in the face of overwhelming evidence that change is required is one of the most common business mistakes.  And it can easily be fatal.

Slang, Sandburg tells us, is the language of the everyday world.  Bring. Take.  What's the real difference, after all?  Either way, I'm transporting my lunch to my place of work.  Are we observing steady erosion of the subtleties and clarity of English expression?  Many (snobs, like me) argue yes.  Are we, however, still succeeding at the task of communicating the essence of the message?  Even I have to concede that point.  Ouch.

BUT...  Are you resisting acknowledgment of change in the essential facts governing your marketplace? 

My language problem is merely a foible (a minor defect or shortcoming in character or behavior).  It bugs me, and sometimes I pass my annoyance on to unsuspecting and innocent bystanders.  Similar resistance to changed or misunderstood business realities is a flaw (an imperfection or weakness and especially one that detracts from the whole or hinders effectiveness).  Flaws can doom a business, and do serious damage to unsuspecting and innocent bystanders, such as employees, suppliers, clients, and (let's not forget) shareholders.

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.