The tradeoff Startup founders must never forget

Them:

So, we’ve just nailed our MVP and we are getting some real traction.  Next we’re going to raise capital, get some funding. We’ll probably go to the Valley as it’s easier to raise there. The valuations are more generous. We’re super pumped, finally getting our startup off the ground.

Me:

I thought you were an entrepreneur? 

Them:

What are you talking about? Of course I am – didn’t you hear what I just said?

Me:

Yes, but here is what I heard….  That you’ve finally got something people want, you’re probably solving a real problem and you’re on your path creating value for others, and eventually yourself. But in this process, you’ve got caught up in pop culture. You’ve forgotten that a big part entrepreneurship is independence – creating your own path. So, you’re off to raise money and get caught up in someone else’s objective – that of the venture capitalist. The same group of people who’d rather see you fail trying to build a billion dollar company,  than help you build a $10 million company. Their business model you see, is based on the former, not the latter. 

Venture Capital - the downside

If there is anything startup founders should remember it is why it’s worth doing at all. Startups are hard, and rarely a path to riches. Entrepreneurship is more about exploration and freedom than money. If you want to be rich, there’s more chance of that happening being an employee of a company that already has a billion dollar valuation.

In both cases: a funded startup or being employee – you’ll compromise control. In that case you may as well have the certainty of money that goes with stock options and employment. If you want to be answerable to anyone other than your customers that is.

It’s a rare event indeed when the deal terms favour the founder. Real entrepreneurs find ways to make money independently with that anti-modern thing called a profit. For every example of an entrepreneur succeeding with funding, there are 99+ that do not. It’s a bet I’d never take unless the VC came knocking on my door and / or I could maintain total control and independence.

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What do Google and George have in common?

Famed venture capitalist Marc Andreessen is known for doing lots of things; he invented the first graphical web interface, he said software is eating the world, and his motto is that he has ‘strong opinions loosely held’ – which I dig. We all ought to be able to change our mind when new information arrives.

And let’s face it, new information is arriving daily with new possibilities to match. Take this recent quote from Andreessen:

“One guy can now build a self driving car. We recently backed a founder who had built his own self driving car. Literally, one guy can now build a self driving car. Ten years ago this was like a DARPA Funded Grand Challenge Research Project. Five years ago this was a team of a thousand at Google. And now, it’s George. It’s one of those things (AI & machine learning) that looks like it’s about to tip, there is one George today, and a thousand Georges tomorrow.”

George & his self driving car

He was referring to George Hotz above.

The insight for entrepreneurs is that the pace of change is faster than a linear human mind can cope with. That idea or technology that you think is just a little too early probably isn’t. The most important thing in society, economics, business and Government today is the law of accelerating returns. And this is just one example of it in action.

If you you’d like to learn more, there is a rare opportunity to attend Singularity University in the Souther Hemisphere. An SU summit is being held in Christchurch this November. I’ll be there absorbing everything I can – why not join me? More details are here – I imagine it will sell out quick given the 2 year plus waiting in the Silicon Valley Campus.

A simple Amazon strategy every business can implement

Jeff Bezos Genius

The future is a pesky little thing to predict. Much of it will surprise us no matter how well versed we are in emerging technology. A lot will change 10 years from now in ways we just couldn’t imagine. But, some things won’t change, and it is easy to know what these things are. So much so that this is a key question Amazon leader Jeff Bezos bases large parts of business strategy on:

“What’s not going to change in the next 10 years?…. You can build a business strategy around the things that are stable in time…. In our retail business, we know that our customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want a vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says; ‘Jeff, I love Amazon; I just wish the prices were a little higher’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible.”

And it is clear to see that while they use technology to make these things possible, the future is predictable and something Amazon or any business can build their strategy and infrastructure around. Jeff said this 4 years ago at the Amazon Web Services forum. With 40% of that 10 year window expired, and I’d say it’s all still true. Seems he has predicted the future, just by flipping the question.

So the only question remaining for your business or startup is this: What things can you be working on that just won’t change?

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This will change your perception of brand loyalty forever

Loyal dog

Brand loyalty is a strange thing, it seems like it is a bit back to front to me. Powerful and large corporations expect you to be loyal to them. But ‘we’ are the one’s who feed them with our money. If a dog should be loyal to it’s owner – those that feed it – then surely brands should be loyal to us?

Here’s another error companies make when it comes to loyalty. They are loyal to marketing methods, social forums and their infrastructure. If there is anything a brand should have total disloyalty to it’s the methods in which they go to market. They are just tools. And tools should always be replaced when a better method arrives. Especially when the objective is serving others.

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How to Start Small to Grow a #MASSIVE Company

One of my totally favourite projects is working with Pollenizer getting startups off the ground and doing corporate venturing. The biggest challenge many entrepreneurs and pretty much every big company trying to get internal startups going is understanding why small is beautiful. Unless the initial business is small enough to test, weird enough to get attention, and easy enough to try in an analogue fashion, then we’ll never get off the ground. We need to think #antiMASSIVE first.

Here’s some of my thoughts on the topic.

 

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Is this the worst product innovation ever?

Wetsuit business suit

If the Quiksilver bedding wasn’t enough, Quiksilver have done it again and introduced possibly the worst, most ill conceived product in surfing history.

The Wetsuit Suit. Yes you read that right, a wetsuit designed in the shape of a business suit. I can only hope that this is some kinda hoax – and even if it is, it surely isn’t worth the effort and ridicule?

The first question that comes to mind is why? Did someone not get the memo that the water is a place we escape the corporate grind.

The second question that comes to mind is why? It would simply never perform as well as a skin hugging wetsuit designed specifically for surfing, or a fitted Hugo Boss.

The third question that comes to mind is why? It takes all of 5 minutes to change out of a wetsuit…. but that’s right, Joey Corporate Surfer must too important to waste even 5 minutes.

The fourth question also happens to be why?  I imagine it will be super comfortable wearing a wetsuit as the salt dries and itches your skin and you’ve got sand up your bum during a power meeting with your boss in your Quiksilver work wetsuit….

Why, why, why? It is incomprehensible. Maybe the Private Equity firm Oaktree Capital  Management who took over the company this year knows why? They’d want to, or the $600 they invested to take the company out of bankruptcy (it still has $300m debt) might be kinda hard to recoup.

This folly was best summarised by Surfer Magazine:

Don’t you just wish you never had to change in and out of that stinky old wetsuit of yours? Well consider your prayers answered! Presenting the oh-so-literal wet suit by Quiksilver. Because how many times have you wished you could just live in one outfit for the entire day? And seriously, who wouldn’t want a soggy crotch while sitting though a budget meeting? Well, logistics aside, this is happening. Quiksilver Japan is apparently onto a market that the majority of us had no idea existed – which consists of businessmen who wish they could just go straight from the water to the conference room all while looking like colossal tools? Sure!

With all the incredulity aside, it shows a company who doesn’t know their customers at all. A company out of touch with why they originally succeeded. A company which is focused on the wrong side of where work society and technology is taking us.

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A business model for every startup

Flying Dog

Here’s a simple business model which should be built into every startup.

Ways to make money using technology which is not available today.

The possibilities of connection are changing so rapidly these days it is quite possible that the way we make money in a few years, is not even technically possible today. The startup may invent the technical possibility, or leverage an emerging possibility for the community they are building. Either way, the path is simple – startups need to ensure that their future revenue streams consider a future possibility, not just the reality of today.

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