So you want to launch a business...

Three deadly temptations

"I can resist anything but temptation."

    Oscar Wilde

Three deadly temptations, indeed.  There are, of course, many, many more.  But three is a good number in a headline - enough to matter, not enough to scare people away.

So which three has Jim Flowers selected for today's sermon?  Well, I recently re-read the Book of Pride and found several variations on that time-honored theme that bear directly and regularly on start-up businesses.  Succumb to these temptations and you risk serious damage or even failure.

Deadly Temptation Number One: attack on too many fronts.  When your product may be reasonably applied across a variety of markets or industries, it's really easy to lose focus and spread yourself too thin.  Example, suppose you invent a uniquely effective point-of-sale advertising device.  Such an item might be valuable to any business that sells something in a face-to-face mode.  That would include at least book stores, restaurants, and real estate agents.  Just imagine the variations required in your pricing models, promotional schemes, distribution channels, and even niche-specific product features to address all those markets.  One set of Magic tricks simply can't mystify all audiences.

Deadly Temptation Number Two: underestimate your competition.  I've talked about this before.  How many times have you heard someone say "We really don't have any competitors.  Our product is truly revolutionary."  Ha!  If you really have no competition, then there may well be no market at all.  At a minimum your prospects have the option to take no action whatsoever, leaving you with a great product, but no sales.

Deadly Temptation Number Three: believe your own hype.  There are fine distinctions between and among appropriate self-confidence, pride, and vanity.  The first is about reliably knowing that you are good by some independent set of measures.  The second is about personally valuing your "goodness" above that of others. The third is about valuing the opinions of others above your verifiable worth.

There is, as you might expect, a vast library of thoughtful commentaries on pride and its close relatives.  Here is a sampling...

"Pride is a powerful narcotic, but it doesn't do much for the auto-immune system."

      Stuart Stevens

"Swallow your pride, you will not die, it's not poison."

Bob Dylan

"Pride grows in the human heart like lard on a pig."

                    Alexander Solzhenitsyn

Heisenberg Compensators - On Sale NOW!

"The future is uncertain... but this uncertainty is at the very heart of human creativity."

    Ilya Prigogine

Three common traits of successful entrepreneurs are: 1) the ability to accept uncertainty; 2) a voracious appetite for additional information; and 3) creativity.  Business winners are seldom rigid, except in their tight focus on their vision.  They are generally committed to action, but seldom to a particular action.  Instead, they devise and select actions that are appropriate to each new situation as the world evolves about them.  And they learn from their mistakes.

My friend Matt told me that we would save a lot of time and trouble if we simply told all fresh entrepreneurs just to go out and buy Heisenberg Compensators.  That would remove all the risk from their startup ventures, he said.  They would all get rich, and fast.

I agreed with Matt, then ran to my computer to find out what in the world he was talking about.

In case you are uninitiated, like me, it turns out that a Heisenberg Compensator is a critical component of the Star Trek transporter system.  It adjusts for the fact that we cannot know both the location and the momentum of a sub-atomic particle simultaneously (Heisenberg's Uncertainty Principle). Without the compensator, the objects or people being transported would arrive scrambled at best, and more likely not at all. 

From my point of view, a successful entrepreneur is, in fact, a walking, talking Heisenberg Compensator, constantly assessing the locations and directions of the various components of his business world and making tiny, but regular, adjustments to his action plans.  There's no need to buy one, after all, if you can be one.  Besides, late model compensators are definitely in short supply, which makes them absurdly expensive.  (I checked on Craig's List - couldn't find one anywhere.)

Learn to bend and you won't break.  Bend in just the right direction, and you'll be a huge success.

Besides, there is seldom a way simply to force a positive solution anyway.  Turning up the power on the transporter cannot remove the need for the compensator.

So, as my other friend, the Earl of Chesterfield, once said,

"Prepare yourself for the world, as the athletes used to do for their exercise; oil your mind and your manners, to give them the necessary suppleness and flexibility; strength alone will not do."
 

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.

Entrepreneurs, check your egos at the door.

A man is like a fraction whose numerator is what he is and whose denominator is what he thinks of himself. The larger the denominator, the smaller the fraction.   
                                                                                                                Leo Tolstoy

One of the most dangerous consequences of self-importance in an entrepreneur is inappropriate confidence in hunches about Market behavior.  Watch carefully for, in particular, the appearance of phrases such as "they just don't get it," or "you'd have to be nuts not to buy this."

The Market is, in fact, always right, as I have pointed here many times before.  It may not always be wise.  After all, somebody did sell a bucket load of pet rocks.  And it may not always be rational.  People do buy military off-road transport vehicles to commute to work in crowded cities.  But it is, nevertheless, always RIGHT.  It will do as it pleases, regardless of your opinion.

And Modesty is always in vogue.  Self-confidence is good.  Self-importance is bad.  Unfortunately, the boundary between them is very fuzzy.

The power of questioning...

"In physics, the term observer effect refers to changes that the act of observation will make on the phenomenon being observed. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner."   

Wikipedia entry

For example, measurement of the properties of electric current requires attachment of some device to the circuit being studied.  The presence of the device in the circuit changes the characteristics of that circuit, which affects the properties of the current being measured.  A casual observer can see, for instance, a battery connected to a light bulb by a few wires, which may be interrupted by a switch.  But ammeters and voltmeters are necessary if one is to understand the hidden electronics of the system.

What does this have to do with a start-up business?

Buried under any observable strategy are numerous assumptions about marketplace size and expected behaviors.  These assumptions commonly vary in validity from widely observed and accepted statements of fact to casual hunches.  The number of people in a developed country, for example, is reasonably well known and reliable.  The number of them who may have a compelling need for a particular product is much more difficult to measure.

Open-minded and thorough questioning of the validity of strategic assumptions is almost certain to induce a change in the overall launch strategy.  Weakly validated assumptions are extremely dangerous.  They may be, in fact, correct.  But what if they are not?  What if their opposites are true?

Serious questioning of founder assumptions is one of the most powerful services that can be provided by Mentors - another reason why Mentors are one of the Four Fundamental Factors.  It amounts to a deliberate application of the "observer effect."  In the case of a pre-launch business plan, encouragement of change in the system through measurement of underlying properties is a really good idea. 

It is almost guaranteed to reduce risk.

Dignity is highly over-rated.

A sense of humor is part of the art of leadership, of getting along with people, of getting things done.
                                                                                                     Dwight D. Eisenhower

Our mothers tell us this.  Our teachers tell us this.  Great writers and philosophers tell us this.  There must be something to it.

Keep your ego in check.  And never lose your sense of humor – regarding yourself.

Dignity is, in fact, highly over-rated.  And its evil twin, pompous self-importance, may be the kiss of death.

Your product or service probably isn't round wheels, sliced bread, or pockets on shirts.  And today, even pockets on shirts are falling out of style.  Newly-understood fractal geometry makes it clear that wheels apparently never were really round - what with all those Hausdorf dimensions and Hilbert curves.  Sliced bread could be on the way out, too.

And, what's more, you are probably not the world's foremost authority.  That title definitely belongs to Irwin Corey.

So keep things light.  It even increases life expectancy.

According to Canada.com, "A good belly laugh has the same physical benefits as a mini-workout. About 100 to 200 laughs are equivalent to 10 minutes of jogging or rowing because this boosts blood flow by at least 20% and reduces the risk of developing heart disease. Abdominal and diaphragm muscles get some toning at the same time. Hearty laughter also reduces stress hormones and boosts the body's natural defence [sic - Canadian spelling] cells and antibodies that help fight infections."

Einstein was a really smart guy.

“You have to learn the rules of the game. And then you have to play better than anyone else.” 

Albert Einstein wasn't an entrepreneur; but this little quotation applies directly to start-up businesses.  And it points out one of the most common mistakes made by company founders.  I have seen this over and over again.

Too many entrepreneurs launch businesses based upon unconfirmed notions about the "rules of the game" - more specifically, about how the marketplace is structured, and how buyers will behave.  And if the entrepreneur is a good salesperson, she will convince others of the correctness of her unsubstantiated conclusions.  They will follow her - investing money, time, and energy in a project that is doomed to failure, or at best to mediocrity.

By all means, trust your hunches.  But exercise appropriate Modesty.  Confirm your hypotheses with serious research.  And run them by your Mentors, too.  That's why you have them.  (You do have Mentors, right?)

You still have to "play better than anyone else."  But, if you don't know the rules, it doesn't matter how well you play, or how hard you try, or how long you keep fighting.  No amount of MOXIE, no incredible Magic, can save you from a faulty understanding of the Market.