Growthink Blog

Kiva to Launch in the United States


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I recently wrote a blog post about Kiva and all the good it is doing worldwide.

As you may recall, Kiva is "the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world."  Specifically, on their website, individuals who need small loans to start or grow their businesses request funding. And, other individuals from around the world offer this funding in increments as low as $25. To date, nearly 500,000 users have lent almost $65 million, interest-free, to developing-world entrepreneurs through Kiva.org.  $3.5 million was distributed last month alone.

Not surprisingly, since the majority of you are based here in the United States, in response to my email about Kiva I received lots of emails saying that Kiva should launch in the United States. I agreed.

And now, a few weeks later, Fortune Magazine is reporting that Kiva plans to launch in the United States within a few months. This could be a HUGE funding opportunity for American entrepreneurs!

Importantly, while the highest loan amount for entrepreneurs in the developing world is $1200, in the United States, it will be $10,000. One issue that hasn't been fully resolved is vetting. In the developing world, Kiva "uses microfinance institution partners to vet entrepreneurs before allowing them to solicit funding. By asking a series of questions to assess roots in the community and the legitimacy of a business, Kiva is able to establish a risk profile for each entrepreneur. Before offering money to, say, the proprietor of a Dominican fruit stand, any lender can read the entrepreneur¹s profile, history of defaults, and a bit about the business."

In the United States, Kiva says that they are "signing on microfinance partners in the Bay Area and in the Northeast," but have not released who these partners will be or how the vetting process will work.

In any case, this is GREAT news for American entrepreneurs.

You can read the full Fortune article here.

The People, or Execution Risk of a Business


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In my last column, I wrote about how to measure risk in a startup and/or emerging company.  In today's column, I go deeper into what is by far the biggest factor driving this risk - namely the "people," or execution risk of a company. 

It is extremely hard to identify a management team of a smaller company (or any company, for that matter) with the right combination of small business and corporate smarts, integrity, and work ethic to build and exit a company for themselves and their investors. 

In my 10 years at Growthink, I have had both the benefit and the misfortune of not only investing in and advising a lot of companies that were successful in executing their growth plans, but also a lot of them that weren't.  And it has been in the comparison between the two that has informed my thinking as to what to look for. 

Here are 7 managerial attributes that I have found present in virtually all of the successful companies with which I have worked, and which were lacking in those that failed:

7.  They are, in fact, a Team.  This may seem obvious, but all great companies are not simply the by-product of a visionary and/or charismatic founder and chief executive, but rather of a multi-disciplinary, multi-faceted, and well-meshed leadership team.  Great companies have cultures of achievement.  The tone of this culture might be, and usually is, set by by a charismatic founder.  But its enduring success is dependent on how it can replicate and maintain that culture as the company grows, and as its founder's role becomes less pronounced.  

6.  It is clear who is in charge.  This may seem contradictory to the above, but all well-led companies have clear and final points of decision-making.  There are many effective styles of leadership, from greatly autocratic to fundamentally consensual, but all of them share the fact that in them there is one person at whose desk the "buck" truly stops.

5.  They have small business discipline.  To paraphrase Guy Kawasaki -- one of the most informed and battle-tested entrepreneurial commentators out there -- the worst folks to run a startup or an emerging company are a group of ex-Microsoft executives.   Entrepreneurial companies are first and foremost small businesses.  As such, their management must a) fervently guard cash flow and manage with a cult-like intensity and b) always make decisions with the mindset that they only have so many "arrows in the quiver" in terms of time and capital to pursue initiatives.

4.  They are risk-takers.  The proper goal of an entrepreneur with outside investors is not to run a small business in the common sense of the term. With the fear of sounding harsh, the best managers are minimally concerned with protecting their own "middle-class" lifestyles.  Rather, they understand that to achieve greatly requires daring greatly.  For investors, the worst outcome of an investment in a company is not necessarily a flame-out failure, but rather a muddling along driven by too conservative managerial decision-making influenced by the desire to preserve salaries.  Companies run this way in fact usually require MORE money to be invested into them, and thus perversely are actually riskier than their harder-charging brethren.

3.  They are Goldilocks-ish.  While there are certainly outliers in this regard, the significant majority of the best entrepreneurial managers are not "too hot" nor "too cold."  Again, not a hard and fast rule, but most venture firms prefer to back a management team where the key people are between the ages of 30 to 45, have had a few past successes and maybe a failure or two.   They are now in that sweet spot between experience and wisdom, between youthful hunger and energy.  They know what they know yet they still have the intellectual and emotional flexibility and curiousity to change and grow.

2.  They are technologists.   All successful emerging company investments are made in what are, at their essence, technology companies.  This does not mean that they are all what would be considered as classic "emerging technology" companies (though the majority of them, in fact, are).    Rather, well-run modern companies leverage technology -- from CRM and ERP to SEO and SEM to scenario-planning and simulation -- to "best practice" their business models.   Their managers understand that "IT" is not just the domain of a geeky guy to call when computers can't boot up, but is rather the crucial skeleton of the organism of their business.

1.  They are pig-headed, determined, and willing to sacrifice to be successful.  More than anything else, great, modern managers work hard.  As in very, very, very, very hard. They work nights.  They work weekends.  They take short vacations, if any.  They work when they're sick.  They work when they're tired.  They work and work and work and then to paraphrase the great (and famously hard-working) golfer Gary Player, "The harder they work, the luckier they get." 
Look for this quality above all others in leaders and managers -- it is almost always the best predictor of the presence of the other qualities on this list, and of entrepreneurs that make their investors a lot of money.

Churrasco, Caipirinhas, and Emerging Technology with a Twist, Por Favor!


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It’s not often that we at Growthink get to see the fruits of our labors in person.  In today’s virtual, global economy, we conduct business with many small companies whose executives we may never meet and whose base of operations we may never visit.  However, we’ve served a vital purpose in growth planning and/or capital-raising for various clients who’ve paved the way in industry and innovation; and of that, we couldn’t be more proud.  Well, perhaps we could if we were there to see the evolution before our own eyes… to witness a milestone.

Last week, I had the great honor (and luxury, if I might say!) to travel to Brazil with my colleague, Dave Fruhling, and to spend time with a client that is developing a technology with the support of the Brazilian government and its university system.  For those who are not versed in emerging markets, Brazil is at the forefront of grant funding for the country’s entrepreneurial endeavors and inventions; the most notable of which has been airline manufacturer Embraer.  Setting a phenomenal precedent for new developments and technologies, this success has brought credibility to emerging economies like Brazil and has stimulated interest in the incubation of other new companies via federal organizations like FINEP (Financiadora de Estudos e Projetos).  More importantly, the university system (both public and private) provides a great deal of R&D for these companies, working collaboratively to provide validation and even certification of patented technologies.  This is not dissimilar to the United States, but what we found was that the accessibility of IP transfers is much more conducive under the Brazilian structure than it is within our own First World processes.

In the time we spent meeting with university research departments, funding organizations, and client partners, we saw nothing less than enthusiasm for and belief in the company’s ability to be THE NEXT Brazilian technological phenomenon.  It was contagious.  I don’t consider myself a tech guru by any means, but I came away full of excitement about propulsion systems, motors, and velocity.  

Is your interest piqued?  It should be.  This client is on the verge of international recognition over the next 3-5 years, and I had the opportunity to meet the people, see the research institutes, experience the test program, and live vicariously through the company’s champions; of which Dave and I now proclaim to be as well.  Sure, we were leading project efforts from our offices; and doing so with diligence and interest – but this trip made us invest even more.  Our team is dedicated to providing the best guidance to the client, to give them and ALL of their stakeholders a chance to be another Brazilian ‘success’ story.

Throughout all of the above, we wove in a mixture of cultural and team-building activities; most of which included eating, drinking, dancing, and even bowling.  Yes, bowling.  The latter – not surprisingly – is not very popular in Brazil, but the client knew of a club with lanes in the back; said lanes, which we graced until the wee hours.  I witnessed several occasions where the beer consumption-to-score ratio was quite impressive, though for one of the engineers on the project there remains little hope of a professional league title.

At one particular festivity, I was introduced to the Brazilian drink of choice: the caipirinha.  I was warned in advance that this sugar-cane drink was quite potent, so I consumed carefully with each one placed in front of me...  Low and behold, a dancer then pulled me on stage to show his “prowess” and skill with spinning ropes, featuring heavy ball-like objects at the ends that could very well result in concussion or death if they made contact with my head.  Despite the beverage intake, I managed to stand very still and exit the stage to applause and body intact.  Of course, it was quite the demonstration from the client’s perspective – my “hazing”, if you will, that garnered many a laugh and ongoing witty remark.

And then there was the barbeque.

Brazil is famous for its barbeque, or Churrasco, featuring grills the size of my apartment and meats seasoned then cooked to perfection.  Note to self: make proper use of the “on” and “off” markers on the table, lest risk a protein overload.  Topped off with mango mousse, it was all a little slice of heaven south of the equator!

On Friday the group dispersed and I explored Rio solo, reflecting upon the education I received from the experience and thanking a very tall statue of Jesus for the wonder of Brazilian people and culture.  Looking out over the lush mountains and the curving coastline, I could understand how one becomes inspired by such a place; a place ripe with beauty, passion, gusto and Bossa Nova.

Finding myself back Stateside, I vow to return again to stimulate my palette and to witness the next leaps of our client into the broader South American marketplace.


Educating Angels & What That Means for Entrepreneurs


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A few months back, a unique conference called "AngelConf" took place in Silicon Valley. The conference was organized for angel investors and its goal was to educate angel investors on how to invest in startups.

Key questions that the event addressed were:

  • How much are you supposed to invest?

  • What legal agreements do you need?

  • Where do you find startups to invest in?

  • How do you pick winners?

It was this last question that conference organizer Paul Graham from YCombinator agreed was the most important.

Graham's first point on this topic is that angel investors should pick startups that "make things that people want." Seems simple enough. However, Graham went on to say that angels should not invest in things that are already wildly popular. "By then it's too late for angels. VCs will already be onto them. As an angel, you have to pick startups before they've got a hit-either because they've made something great but users don't realize it yet, like Google early on, or because they're still an iteration or two away from the big hit, like Paypal when they were making software for transferring money between PDAs."

As such, angel investors need to be able to predict future market sizes (not just identify markets that are already doing well).

Graham's second point on this topic is that angel investors need to pick founders who are winners. On this point, he said the following:

"What makes a good founder? If there were a word that meant the opposite of hapless, that would be the one. Bad founders seem hapless. They may be smart, or not, but somehow events overwhelm them and they get discouraged and give up. Good founders make things happen the way they want. Which is not to say they force things to happen in a predefined way. Good founders have a healthy respect for reality. But they are relentlessly resourceful. That's the closest I can get to the opposite of hapless. You want to fund people who are relentlessly resourceful."    

Now, what this means to you as the entrepreneur is that this is how you will be judged by many angel investors. They will judge the future potential of your business concept and they will judge the potential of you and/or your management team.

With regards to the potential of your business concept, you must convince them that your market is poised for growth, and in doing so, you MUST cite multiple research and statistical points that confirm your views (I can't reiterate enough how critical great market research is).

With regards to the quality of you, the founder, and/or your management team, you need to show the investor, via past performance and ALL current interaction between you and the investor that you are a winner. You need to show them that you make things happen. Here are some examples of how can you accomplish this:

  • Tell them a current business objective and come back to them two weeks later and show them you have achieved it.

  • Find some way you can help them (e.g., introducing them to a business contact of yours that could help them) and execute on it right away.

  • Ask them about questions they have about your opportunity and/or market and come back to them within 24 hours with great research and answers to their questions.

These smaller, short-term accomplishments which show investors that you can execute and that you are clearly not 'hapless' will massively improve your chances of getting them to invest in you.


Breakthrough Business Idea Generator


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I want to tell you about a technique I picked up, that I can directly attribute to millions of dollars of revenues that I have generated over the years. But, even so, I'm far from mastering it.

The technique is a brainstorming technique called Assumption Reversal. It is incredibly powerful. It's the technique that has been responsible for, among many others, the ATM machine and Henry Ford's development of an assembly line which revolutionized manufacturing.

The Assumption Reversal brainstorming technique allows you to look at things differently and triggers new, creative ideas. It can be used to develop new business ideas and new product ideas, and for you to overcome virtually any challenge you face, from marketing obstacles to staffing difficulties and more.

I have put together a brief video that walks you through the four steps of the Assumption Reversal brainstorming technique and gives you a real-world example. I think you'll get much more from the video than just reading about it.

Mastering this technique could revolutionize you and your business. Check out the video below:


Exclusive Report: How to Quickly, Easily & Expertly Conduct Zero-Cost Market Research For Your Business


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I started my career in market research. At one point, I was pretty immersed in it. In fact, articles I wrote were published in Quirk's Marketing Research Review and I was a member of SCIP, the Society of Competitive Intelligence Professionals.

Having helped start and grow hundreds of companies since then, I can definitely say that my market research background has been a HUGE asset.

Every successful venture I have launched or help launch leveraged opportunities and strategies based on the industry, customer and competitor research we conducted.

I have also used market research time and time again to find investors and joint venture partners for businesses.

Since market research is so critical to businesses, and since the Internet presents such a goldmine of research for those who know who to find it, I decided to put together a report on how to quickly and expertly conduct market research online.

Some of the report is methodologies I use and other parts include my most prized bookmarks….those “go to” research sites that I visit each time an important research question or project comes out.

Want to learn how you can conduct market research for free instead of paying thousands of dollars to market research firms? Well, I put together a brief video to show you how:



I'm excited to get this report in the hands of as many entrepreneurs and business owners as possible, because I know the value effective and efficient market research has had on my business endeavors.  The report is currently free for current Growthink University members, so if you're a member, you are in luck! Just go to the download center and pick up your copy.

For those of you who aren't members of Growthink University, I would like to make a special offer available to you.  Because I'm in a celebratory mood, (this month is my wife’s birthday) I would like to offer this promotion to those interested in obtaining a copy:

As my wife would never allow me to post her age on my blog, what I have done is incorporate her age into this promotion.  For the next few days, I'm offering this market research report for one CENT for each year of my wife’s age.

As a bonus with your purchase, I’ll also include 30-day access to Growthink University so you can see the wealth of capital raising, business planning information we've assembled for entrepreneurs and business owners just like you. You’ll also gain access to all the Growthink University bonuses like our Ultimate Business Plan Template, special reports, VC Directory and Angel Investor Group Directory.

To order the market research report (and to find out exactly how old my wife is :)),follow this link:
https://www.growthinkuniversity.com/public/268.cfm

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