Winston Churchill once said, "If you're going through hell, keep going."
This quote is really applicable to entrepreneurs.
Mainly because rarely, if ever, does the process of starting and growing a company go smoothly.
There are often lots of mis-starts and mistakes and course correction is nearly always required.
The way I see it, the fact that things don't always go smoothly or work at first is a good thing. It weeds out the weak entrepreneurs, which provide more opportunity for profits for us stronger entrepreneurs.
There are lots of times when entrepreneurs must "go through hell." For example, when the entrepreneur is seeking capital, or looking for initial customers or distributors. Other things like hiring key team members or executing on a new marketing campaign can also be quite challenging.
But as Churchill pointed out, entrepreneurs must keep going. That's not to say that you should put your head down and try to bulldoze through whatever you're trying to accomplish. If things aren't going well, you need to consider alternatives.
Specifically, if something doesn't work at first, you must try, try again. But if it doesn't work a second time, you need to start rethinking and modifying your strategy.
Incremental changes often bring about significant results. And these incremental changes often result from trying something that didn't work at first, and continually modifying it until it does.
One example that comes to mind for me is raising venture capital. In my early days, I met with a lot of venture capitalists to try to raise money for my clients. And I encountered a lot of failure. Meeting after meeting after meeting, but no results. So, I started trying new things, and sure enough, after trying enough new tactics, I found ones that really worked.
(FYI, if you are currently seeking venture capital, I laid out these strategies in my Venture Capital Pitch Formula program - watch the video here.)
So, don't give up if you feel you are going through hell right now. Sure it's not fun. But if you keep going, chances are you'll come out a winner.
I talk to a lot of entrepreneurs.
Which I love to do. I love hearing cool, new ideas. I love hearing the passion. And I love figuring out how I can help them successfully go from point A to point B.
But one thing that frustrates me is seeing entrepreneurs making the same mistake over and over and over again.
And the biggest mistake I see is a lack of focus.
This lack of focus is best summed up by the ancient Chinese proverb -- “man who chases two rabbits catches neither.”
In other words, if you try to pursue two entrepreneurial ideas, both will most likely elude you.
And I hear this all the time. Budding entrepreneurs telling me about their great idea. And then a moment later saying, “Oh…I have one other idea that I’m working on that I need to tell you about.”
I don’t usually say the Chinese proverb here, but I give my own line. Which is, “If you try to do 2 things, maybe you can do a B+ job at both. But in today’s competitive market place, you need to do an A or A+ job to succeed. And to do that kind of job, you need to focus on just one opportunity.”
The Chinese version is better.
As an entrepreneur, you are inherently creative. If you haven’t launched your first venture, you must pick just one opportunity. Brainstorm and write down all of your ideas. And then judge them and figure out the one you want to pursue.
And once you decide you want to pursue that idea, forget the rest. Use all your creativity and brainstorming power on that one idea. Use it to figure out creative marketing plans, unique financing ideas, and ways to best lead your organization.
Entrepreneurs by definition work in a resource constrained environment (if resources weren’t constrained, the entrepreneurs would be the CEO of a Fortune 500 company). So, when resources are constrained, you can’t possibly divide the few resources you have into multiple opportunities. Rather, you absolutely must focus on just one opportunity, and put everything you have into achieving it.
So, make sure you focus all of your efforts on just one opportunity. And once you achieve success with that opportunity, you can focus on your other ideas and opportunities.
Last weekend, friends of ours invited me and my family to their country club.
It was a beautiful club, and unlike other clubs in the area, had a big lake where everyone swam.
But immediately after gazing at the beauty of the lake, something else caught my eye.
An old high diving board. I mean a really high one.
I knew my kids saw it too, so I turned to see their reactions.
My 8-year old daughter had a very calm reaction; for there was no way in her mind that she was going to jump off the board.
My 10-year old son, on the other hand, looked excited and nervous at the same time. Since he was already contemplating his dilemma.....jumping off it would be fun...but really scary.
As entrepreneurs, jumping off the high diving board is something we must do quite often. Sure, we are not physically climbing up a ladder and jumping into a pool of water. But we must often do things that are out of our comfort zone if we want to succeed.
What are some of these entrepreneurial “high dive” moments?
1. Starting your business plan. The first step in starting a business is always the hardest. It’s committing to yourself that you’re really going to go out on your own. Most folks dream about having their own company. But the first real step is putting your business idea down on paper as a business plan. (Note: for help with your business plan, watch this video.)
2. Getting advisors. When I interviewed Dr. Basil Peters, he told me that getting mentors and advisors is an entrepreneur's most controllable success factor. Yet, many entrepreneurs are afraid to find and ask advisors for help. Maybe it’s the fear of uncovering what we don’t know, or the fear of people we respect disagreeing with some of our ideas or assumptions. But if you want to succeed, you need these expert opinions and guidance.
3. Talking to customers. Many entrepreneurs don’t speak to their customers early enough. They come up with ideas that they think will work. But they don’t ask prospective customers if they will buy the products. Likewise, even when entrepreneurs successfully sell to customers, they are often fearful of asking for referrals.
4. Meeting with investors. A final entrepreneurial “high dive” moment that I wanted to mention is meeting with investors. This legitimately can be very frightening…it’s scary when you’re telling others about your entrepreneurial baby who have the ability to make (by funding you) or break you (by not funding you). Worse yet is the potential of the investors to be totally under-whelmed by you and/or your idea to an extent that you have to go back to the drawing board. (Note: to make sure you make every investor meeting a success, watch this video.)
As Franklin D. Roosevelt said in his first inaugural address, “The only thing we have to fear is fear itself.” So jump off that high dive board, and achieve the success you deserve.
And as for my son….his first trip up the high dive ladder was slow and methodical. Then he stood at the edge of the board and thought for a while before his first jump.
After the jump, everything changed. When his head first emerged from the water, he had an enormous smile of joy, satisfaction and pride that he had faced his fears. And he must have gone off the diving board 20 more times after that!!!
My 10 year old son and 8-year old daughter tend to get along pretty well.
But, there's still times where they're at each others' throats.
The other day was one of those days.
So, my wife and I used our usual plan - divide and conquer.
The divide and conquer plan is pretty simple. She takes one of the kids. And I take the other.
The fighting stops instantly as our kids are separated, and each of our kids gets one-on-one time with one of their parents.
Now, even though we prefer to do things as a whole family, the plan works great. And either later that day, or the next day, we'll regroup and do something as a complete family.
The divide and conquer plan can also be used in your business. For example, clearly there are times when your whole company should meet to form company-wide bonds.
But many other times, you, as the leader, should divide. For example, you should spend time just with your marketing team. That team will then feel special. They will not be jockeying for attention against other parts of the company.
And you can use this time to really focus on that one area. To improve it. To set metrics for the team to perform against.
The leaders of sports teams divide and conquer all the time. A typical professional football coach will do lots of drills with his complete team. And then, like a business, will separate into functional areas led by specific coaches; like the linebackers coach, the wide receivers coach, the quarterbacks coach, and so on.
And then the head coach will circulate among each of these functional areas to add value, support them, and make sure they are getting in position to help the entire organization perform the best it can.
Divide and conquer is also a great technique if your business faces multiple challenges. It is typically most effective to overcome one challenge at a time. While multi-tasking often makes us feel that we are being productive, it often backfires with key tasks not getting done as quickly as they should.
So make sure that you constantly divide or separate your business challenges and functional areas, and conquer or devote the required time to nurture and solve them.
Last week, Vringo, a video ringtone company raised $9.2 million.
That’s a lot of money, particularly considering that Vringo only generated $20,000 in revenues last year.
What’s most interesting is how Vringo raised the money.
It didn’t raise the money from venture capitalists, angel investors, or any of the usual suspects. Which is particularly surprising since Vringo’s CEO and co-founder, Jon Medved, was formerly a venture capitalist himself.
And it’s surprising since Vringo had previously raised $17 million in venture capital.
So what did Vringo do instead?
Vringo decided to go public on the New York Stock Exchange.
Vringo sold 2.4 million shares at $4.60 per share for a total of $11 million. (The stock price has since decreased to $3.80 per share.)
In an interview with the New York Times, Medved sited a couple of key advantages of being a public company, including:
1. It gives credibility. This credibility is key to a small company, particularly if it is selling to big customers who might be skeptical of their ability to stay around long-term.
2. It helps with recruiting top management talent, particularly since the value of/likelihood of exercising employee stock options appears greater.
The huge negatives of going public however were the massive amount of time required to do the pre-IPO roadshow and the $1.8 MILLION in estimated offering fees.
That is a lot of money -- and unfortunately precludes most other entrepreneurs from taking this route. But, I would imagine that with the right law firm, these fees could have been dramatically reduced, to half that amount or less. But which would still require an entrepreneur to raise an angel round to fund the expense of going public.
According to Medved in his NY Times interview, when asked about whether he would recommend going public to other smaller companies, he replied: “I would certainly tell them to think about it, and not to rule it out. It’s a mistake to rule it out from first moment. Most people don’t even think it’s possible. We proved it’s not only possible, but it works.”
Next week, I will be unveiling an even more creative funding source than taking your company public. With this brand new source, you’re not going to raise $9.2 million (it works for smaller amounts of money). But, you won’t need to spend a penny on fees, you can raise the money really quickly, it’s practically foolproof, and you don’t ever have to pay the money back….pretty exciting stuff.
How many times have you heard someone say, "Don't put all your eggs in one basket"?
When it comes to any kind of investing, this is very good advice.
But, if this is the case, why don’t investors in private equity diversify?
Unfortunately, most individual investors in private equity significantly under-diversify their portfolios -- investing in one or only a handful of companies. By so doing, they both greatly increase their risk profile and greatly decrease their probabilities of seeing investment return.
Quite simply, investing in just one or a handful of private companies is way, way too risky for most investors and should be avoided at all costs.
Rather, to leverage the dynamic returns in this sector – click here for a summary of 8 in-depth studies examining returns for the startup and emerging company (or "angel investing") asset class showing an average annual return reported across the studies of 27.3% - the only prudent approach is via a portfolio of positions.
Building a Portfolio - Problems With Current Solutions
Admittedly, a portfolio approach to private equity is much easier said than done for the individual investor. The 3 traditional methods of early-stage private equity diversification all have significant drawbacks:
1. Building a Portfolio One Company At A Time. It is certainly possible to build a portfolio one company at a time. Famed technology investors like Vinod Khosla and Ron Conway have taken this approach, with personal investment positions in literally dozens (if not more) of companies. They, however, are both professional investors and technologists, and deeply networked into the core U.S. angel investor deal community - namely Silicon Valley. And as they and other both admit in interviews, there are strong "hobbyist" and "philanthropic" aspects to their deal interests. Vinod Khosla, in particular, has stated that he is motivated in his current investing as much by his desire to contribute to the development of eco-friendly technologies as he is to making money.
2. Joining an Angel Group. Increasingly in recent years, there have sprung up angel investor networking groups around the country. Most are centered in the main entrepreneurial hubs - Silicon Valley, Los Angeles, Boston, New York, Austin, Phoenix, Salt Lake - among other locales, and generally involve groups of individual investors coming together to review and diligence deals in a group review format. These groups have a lot of benefits - including networking and providing a forum for both less sophisticated investors and entrepreneurs to learn the basic process of private company investing. Like Mr. Conway and Mr. Khosla, many of the angels in these groups are retired (or semi-retired) executives and businesspeople who participate in them as much from a hobbyist perspective as from a money-making one. Not surprisingly, their general investment track records are mediocre at best, and there is a high likelihood of "negative selection bias," whereby the better companies and entrepreneurs are often loathe to approach them because of the inefficiencies of their investment processes and the somewhat "off" messaging and perspectives of many of their members.
3. Becoming a Limited Partner Investor in a Venture Capital or Private Equity Fund. While the biggest private equity and VC funds - the Blackstones and the Sequoias of the world - are, because of their size, off limits to all but the largest of individual investors ($50 million+), there are literally thousands of smaller venture capital and private equity funds that accept capital in smaller increments from individual investors. Some of them have good track records of success (though relatively few in the current market), but as "portfolio plays" they have some core limitations:
o All but the largest funds themselves only invest in a handful of deals. It is unusual for the typical VC or private equity fund to do more than a few deals/year, and also have a tendency to concentrate their holdings in a single industry or stage of business.
o Far more problematically, because of their traditional 2.5% (on average) management fee model, there has been a great propensity in recent years for the better funds to grow quite large. It is unusual for a fund with quality managers with a track record of success to have less than $150 million under management. This larger fund size, in turn, greatly defines the kinds of deals in which the fund can, for logistical purposes, invest. It is unusual for a fund of this size to make an investment of less than $10 million into a single deal, thereby requiring them to invest mainly in later-stage technology and/or higher cash flowing middle market companies. While there is nothing inherently wrong with these strategies, the problem is that in recent years there are have been literally more venture capital and private equity funds out there than actual operating companies in which to invest! This reality has a) greatly driven down the number of deals that a typical fund has/can do in a particular year and is b) leading to a "dead man walking" fund phenomenon where funds sometimes go years without actually making investments.
So What To Do?
We strongly recommend that anyone evaluating earlier-stage, private company deal opportunities do so only in the context of significant advisory and diligence assistance from accounting, legal, IT services, and management consulting firms that specialize in working with startups and emerging companies.
Quite simply, as a wise old horseman once quipped - bet on the jockeys not the horses.
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Last week I was finishing up the development of a new money raising product about Crowdfunding (an extremely exciting new way to fund any company).
I wanted to have a logo designed for the product, so on a friend’s advice, I decided to try Hatchwise.com.
Hatchwise.com is very cool. You go to the site and set up a “contest” to get your logo designed. It asks you a few basic questions (name on your logo, what the product/service is, who your target audience is, etc.) and then your contest begins.
The contest works like this: graphic designers from around the world read your design brief (the questions you answered) and submit logos to try and win your contest.
What's so cool is that you get to see the designs before you select the final designer and pay for it. So you know exactly what you are getting first. And you typically end up seeing lots of interesting designs.
You can see a sample of the logos that were submitted in my contest below. Click here or on the image to go to the full page on Hatchwise.com.
Now what I also really like about Hatchwise is that in addition to graphic design projects (which can include logos, websites, brochures, etc.), you can use it for NAMING new products.
Specifically, if you have an idea for a company name or a product/service name, you can submit the general idea to Hatchwise, and members will submit to you potential names and logos. And, they’ll even make sure the domain names are available for you.
This is really cool.
But, the last part (making sure the domain names are available for you) is something I want you to be aware of as this is where I got burned.
You see, if you look at my design contest again, you’ll see that the name of my Crowdfunding product WAS Crowdfunding Secrets.
Well, when I soon launch that product, it’s not going to be called Crowdfunding Secrets. That’s because, I didn’t decide to reserve the domain CrowdfundingSecrets.com until a few days AFTER my contest.
And what did I find? Someone who had seen my contest reserved that domain so I either had to pay them a premium to buy it or not use it.
Fortunately, the buyer/domain squatter probably didn’t even know what Crowdfunding was or realize that Crowdfunding is a brand new field.
So, there’s tons of Crowdfunding domains to choose from (so I just changed the product name to Crowdfunding Formula and the domain to CrowdfundingFormula.com).
But I want to make sure you understand this lesson – if you post anything about your future products or company online, make sure you have already reserved any domain names you may want. Because someone else could steal your name from you.
Not cool…but it happened to me…
Look at this picture:
Those are pretty big smiles don't ya think?
Well, those are my kids. And the reason they are smiling so much is that today is their last day of school.
Do you remember how you used to feel on the last day of school. I do. I clearly remember how good it felt. Knowing that I was done with whatever grade I was in. And that I had the long, fun summer to look forward to.
So, why am I telling you this?
Because I want you to think about the last time you felt this way in your business.
When was the last time you were really excited after accomplishing a goal. Enough so that you really celebrated and relaxed for at least a day or two after accomplishing it.
As an entrepreneur, too many times it's go go go.
We must all slow down sometimes to enjoy life. We need to enjoy the journey of becoming a successful entrepreneur.
To do this, you need to constantly be setting goals for yourself. Annual goals, quarterly goals, monthly goals, weekly goals and daily goals.
And for certain goals, after you achieve them, you should reward yourself.
Sometimes the reward might be as small as giving yourself a coffee break or a piece of candy.
At other times, a weekend away or a day off makes sense.
But you must achieve pre-set goals, and you must reward yourself. That makes the journey fun and enjoyable. And it ensures that you continue to make progress towards completing your journey and entering the land of the outrageously successful entrepreneur.
A fair portion of “Productivity Secrets for Entrepreneurs: How to Get More Done, Make More Money and Take More Time Off" discusses the importance of goal setting and rewards for you and your employees. It teaches you to set the right goals and achieve a whole lot more. Learn more here.
We’ve all seen it on TV or in the movies.
Usually the plot includes a military or police agency.
And then some big event happens.
And what’s the first thing they do after the event?
They have a debriefing.
They get one or more of the witnesses in a room and ask them all sorts of questions about what happened.
Debriefings are a type of after action review (AAR). AARs, which were originally developed by the U.S. Army, are reviews that determine what happened, why it happened, and how performance could be improved the next time the same or similar event happens.
Does your business conduct debriefings?
If not, you might be missing out on a huge opportunity.
Why? Well there are a few reasons.
The first is that the easiest way to be more successful is to figure out what you’ve done that has been successful, and simply repeat it. So, when you debrief after a project, spend time determining what went right. And then make sure to repeat that in the future.
And with regards to what went wrong, this is an opportunity to improve performance in the future.
Importantly, conducting after action reviews discipline your organization to continually learn and improve.
They’re not just about what went wrong. Nor should they only focus on what went right. It’s about both. And once you determine both, you can repeat your successes, fix your mistakes, and make future projects much more successful.
Toy Story 3? Karate Kid 3? Iron Man 2? Sex and The City 2? The A-Team? Where are all of the NEW Ideas in Entertainment?
The movie business of today is all "pre-sold" IP. NEW media has become the home of innovation and imagination.
Learn What Hollywood 4G Will Look Like
Nothing is more important to U.S. consumers than their entertainment choices, but are movies and broadcast TV even relevant in the new world of entertainment?
Or will the convergence of content, internet, mobile applications, games and social media be the onrushing asteroids that will soon destroy the movie dinosaurs?
Is it a 3-year fad, or will new technologies like 3-D keep going to the movies from being relegated to the dustbin of history like Vaudeville, the afternoon newspaper, the evening news, the variety show, and the compact-disc?
Has the U.S. movie box office - traditionally the holy grail of movie industry metrics -- become increasingly irrelevant?
What is the future of Pay-Per-View/Video-on-Demand (PPV and VOD)?
Video-on-demand alone is estimated to grow from a $1.1 billion dollar business this year to $5 billion by 2012, taking market share away from DVD retailers and intensifying the carriers' ambition to bid for the best (and first run) titles.
How about Internet Video?
Annual U.S. revenues from internet video services spanning user-generated content to television shows and movies will exceed $7 billion this year.
And this business is becoming LESS advertising driven -- transitioning from today's model of more than 85% of revenue being ad-based to less than 60% and trending down with the balance being generated by content payments, either for one-time viewings or via subscriptions.
What do these these new realities mean for the content creators of new media and for traditional studios, filmmakers, producers, and distributors?
What is the future for good-old fashioned DVD rentals and sales?
Get The Answers
I am very excited to share with you the opportunity to meet the Managing Director of Growthink's new media and entertainment practice, Mr. Lee Muhl.
Lee, quite simply, has forgotten WAY more about the entertainment business than most of us will ever know (see his biography below).
And he has graciously agreed to share the answers to the above questions, which winning business models to run with, which losers to run from, and much, much more!
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Biography of Mr. Lee Muhl, Managing Director, Growthink's New Media and Entertainment Practice
Lee Muhl heads Growthink's entertainment-media vertical, encompassing the making and distribution of films, television programming, games, new media content and numerous related distribution platforms, technologies and methodologies including theatrical exhibition, DVD, PPV-VOD, mobile applications, internet/IPTV, and a variety of new content modalities (digital theater conversion, advertainment, infotainment, advergaming).
To date, Lee has overseen the successful conclusion of more than 100 Growthink engagements for funding plans and sophisticated media financial models, including film projects ranging from the production of numerous independent films and major studio productions to scores of angel and seed development fundings.
Originally trained in transactional entertainment law and the representation of above-line talent, Lee worked with a number of well-known writer-director-producers in both traditional studio/network deals and in arranging non-studio financing for independent film production including such classics as Bladerunner. In 1999, Lee joined the Silicon Valley new media content contingent as an Internet-company CEO, and has since founded two innovative Los Angeles media companies. With Growthink, Lee has continued his deep involvement with film, digital media, content delivery protocols, gaming technologies and sports initiatives.
A former partner in two leading Los Angeles media law firms, Lee holds a J.D. from the UCLA School of Law where he also served as Chief Comment Editor of the UCLA Law Review, and earned his B.A. in History from UCLA. He is a current member of the California State Bar, and the Hollywood Writers Guild.