Stephen Fanjoy

Resources, Reflections and Refractions  
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Entrepreneurship

 

Myth: Entrepreneurship Will Make You Rich

Wise words from Eric Ries:

One of the unfortunate side effects of all the publicity and hype surrounding startups is the idea that entrepreneurship is a guaranteed path to fame and riches. It isn’t. Building a startup is incredibly hard, stressful, chaotic and –- more often than not –- results in failure. That doesn’t mean it’s not a worthwhile thing to do, just that it’s not a good way to make money.

A more rational career path for money-making is one that rewards effort, in the form of promotions, increased security, salary and status. Startups, unfortunately, punish effort that doesn’t yield results. In fact, the biggest source of waste in a startup is building something nobody wants. While in an academic R&D lab, creation for creation’s sake will often get you praise, in a startup, it will often put you out of business.

So why become an entrepreneur instead of developing technology in an R&D lab? Three reasons: change the world, make customers’ lives better and create an organization of lasting value. If you only want to do one of these things, there are better options. But only startups combine all three.

Read more at gigaom.com

 

Filed under  //   Entrepreneurship  

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Guy Kawasaki's 10/20/30 Rule of PowerPoint

To prevent an epidemic of Ménière’s in the venture capital community, I am evangelizing the 10/20/30 Rule of PowerPoint. It’s quite simple: a PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points. While I’m in the venture capital business, this rule is applicable for any presentation to reach agreement: for example, raising capital, making a sale, forming a partnership, etc.The ten topics that a venture capitalist cares about are:

  1. Problem
  2. Your solution
  3. Business model
  4. Underlying magic/technology
  5. Marketing and sales
  6. Competition
  7. Team
  8. Projections and milestones
  9. Status and timeline


Read more: http://blog.guykawasaki.com/2005/12/the_102030_rule.html#ixzz0Td8fD7a2

Filed under  //   Entrepreneurship  

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Garr Reynolds on Presentation Zen

Here are key excerpts from Guy Kawasaki's interview with Garr Reynold on his book: Presentation Zen: Simple Ideas on Presentation Design and Delivery

At its heart Presentation Zen is about restraint, simplicity, and a natural approach to presentations that is appropriate for an age in which design-thinking, storytelling, and “right-brain thinking” are crucial complements to analysis, logic, and argument.

... True, the templates and wizards of the past probably took most of us—who didn’t know any better anyway—down a road to “really bad PowerPoint” as Seth Godin calls it. But today we know better, and we can make effective presentations with even older versions of PowerPoint—often by ignoring most of the features. Ultimately it comes down to us and our skills and our content. Each case is different, and some of the best presentations include not a single slide. In the end it is about knowing your material deeply and designing visuals that augment and amplify your spoken message.

... If you want to know how to make better presentations, buy Made to Stick by Chip Heath and Dan Heath. The Heath brothers found that sticky, compelling, and memorable messages and ideas share six common attributes: Simplicity, Unexpectedness, Concreteness, Credibility, Emotions, and Stories. Ask yourself how your presentations rate for these elements, and you are on your way to crafting presentations that stick.

... Steve Jobs makes it look easy. He’s comfortable and relaxed. This in turn makes the audience feel relaxed. Steve also speaks in a manner that is conversational, and even though he practices a lot before the event, his words never sound scripted. Steve uses the slides to help him tell a story, and he interacts with them in a natural way, rarely turning his back on the audience because monitors in front show the same onscreen image as well as the next slide. Steve uses visuals, his own words, and a natural presence to tell his story. His visuals do not overpower him, but they are an important component of the talk. Steve also demos his own software.

... The presentation should have about ten slides, last no more than twenty minutes, and contain no font smaller than about thirty points. I especially like the twenty-minute limitation of this method. However, the audience should have no idea how many slides you have. Once they start counting slides all is lost. As far as text goes, I say as little as possible on slides, but when text does appear it should be large and serve to complement your words. People did not come to read; they came to hear. Any speaker can read bullet points. The audience wants to hear your story not read it.

... It’s good that PowerPoint and Keynote have many transition options, but people need to exercise restraint and use a very few effects. I suggest using no more than two to three different types of transition effects per presentation and not use transition effects for every slide. I use a fade to black between the major sections of a talk to communicate closure of one section and the opening of the next one. I often use a smooth dissolve to gently move from one visual to the next as I continue speaking. Using no transition effects is also often appropriate. When you watch a film or a TV show you are not usually aware of the transition effects from one scene to another--that would be distracting. Audiences should not notice the effects we employ between slides too.

... You should rehearse at least three to four times all the way through and rehearse the first three minutes at least ten times or more. You also need to do a formal dress rehearsal in front of a real audience such as coworkers who can give you constructive criticism. In some ways good presenting is like good writing, you’ve got to pare it down and dump the superfluous and the non-essential. But since we are so close to the material it is hard for us to see what works and what does not, or what is repetitive, etc. This is why you cannot only rehearse alone. You’ve got to rehearse in front of others so that you can experience the nerves, the blank stares, etc. The more you rehearse the more the fear of the unknown is removed. The more the fear is removed, the more confident you will become. As you become more confident you will feel more relaxed and your confidence will shine through. The thing about confidence is that it’s impossible to fake, but with practice you will indeed become a confident speaker. And yes, it is possible to rehearse too much. You want it to sound natural and fresh, not mechancial and memorized. Usually three to four full rehearsals will get you there.

... The problem with most presentations is that people try to include too much. You can go deep or you can go wide, but you can’t really do both. What is the core message? This time “off the grid” with paper and pencil or a white board is where you can clarify your ideas and then get them on paper visually. After your ideas and basic structure are clear, then you can open up the software and start laying out the story in the slide sorter view.

... I have pointed to many (great presenters) on my site over the years such as Seth Godin, Steve Jobs, you, Al Gore, Lawrence Lessig, Tom Peters, Hans Rosling, and many more. Recently I have come to think that US senator Barack Obama is an amazing speech maker as well. But more than anything, I point people to TED where they can see some really good presentations and speeches by some very smart and creative people who are all trying to change the world in their own way. Each case is different, but really, if you’re not trying to change the world, what is the point of making a presentation?

Read the full interview at: http://blog.guykawasaki.com/2008/01/ten-questions-w.html#ixzz0Td0yuxLw

Filed under  //   Entrepreneurship  

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Clusters of Entrepreneurship — HBS Working Knowledge

Clusters of Entrepreneurship

Executive Summary:

Economic growth is highly correlated with an abundance of small, entrepreneurial firms. This relationship is even stronger looking across industries within cities, and has been taken as evidence for competition spurring technological progress, product cycles where growth is faster at earlier stages, and the importance of entrepreneurship for area success. Any of these interpretations is possible, however, and the only thing that we can be sure of is that entrepreneurial clusters exist in some areas but not in others. This paper first documents systematically some basic facts about average establishment size and new employment growth through entrepreneurship, then analyzes entry and industrial structures at the region and the city levels using the Longitudinal Business Database. Key concepts include:

  • There is a remarkably strong correlation between smaller average firm size and subsequent employment growth due to start-ups.
  • Evidence does not support the view that regional differences in demand for entrepreneurship are responsible for these entrepreneurial clusters.
  • Instead, the evidence suggests that spatial differences in the fixed costs of entrepreneurship and/or in the supply of entrepreneurs best explain cluster formation.

Filed under  //   Entrepreneurship   Innovation   Politics  

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12 Facts About Entrepreneurs

The Kauffman Foundation  published a report titled “The Anatomy of an Entrepreneur”  based on a survey of 549 company founders across a variety of industries. Here are some of their findings:

1. The average and median age of company founders when they started their current companies was 40

2. 95.1 percent of respondents themselves had earned bachelor’s degrees, and 47 percent had more advanced degrees

3. Less than 1 percent came from extremely rich or extremely poor backgrounds

4. 15.2% of founders had a sibling that previously started a business

5. 69.9 percent of respondents indicated they were married when they launched their first business. An additional 5.2 percent were divorced, separated, or widowed

6. 59.7 percent of respondents indicated they had at least one child when they launched their first business, and 43.5 percent had two or more children

7. The majority of the entrepreneurs in the sample were serial entrepreneurs. The average number of businesses launched by respondents was approximately 2.3

8. 74.8 percent indicated desire to build wealth as an important motivation in becoming an entrepreneur

9. Only 4.5 percent said the inability to find traditional employment was an important factor in starting a business

10. Entrepreneurs are usually better educated than their parents

11. Entrepreneurship doesn’t always run in the family. More than half (51.9 percent) of respondents were the first in their families to launch a business

12. The majority of respondents (75.4 percent) had worked as employees at other companies for more than six years before launching their own companies

 

Filed under  //   Entrepreneurship  

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5 Business Models for Social Media Startups

Jun Loayza is the President of SocialMediaMarketing.com, a company focused on building social media campaigns for companies. He is also the co-founder of Viralogy.com, which measures and ranks your social influence online. He loves to meet other young, motivated entrepreneurs, and can be reached though his personal blog.

During the first Internet boom, the most common business model was probably, “get a ton of traffic, then figure out how to make money” — which savvy readers will note isn’t a very good business model. Often, the way those businesses attempted to make money on that traffic was to use display or text advertising. Making money from advertising is still possible, but it’s no longer as easy as building a site and putting some ads on it. Fortunately, there are a number of business models to choose from.

Today’s social media startups are finding unique ways of generating revenue from the very beginning. Here are a few of the revenue models that they’re using and how you can apply them to your company.

Read about 1) Freemium, 2) Affiliate, 3) Subscription, 4) Virtual Goods and 5) Advertising business models: mashable.com

Filed under  //   Entrepreneurship   Strategy  

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Harvard's Peter Bregman: 18-Minute Plan for Managing Your Day

Key excerpts:

STEP 1 (5 Minutes) Set Plan for Day. Before turning on your computer, sit down with a blank piece of paper and decide what will make this day highly successful. What can you realistically accomplish that will further your goals and allow you to leave at the end of the day feeling like you've been productive and successful? Write those things down... take your calendar and schedule those things into time slots, placing the hardest and most important items at the beginning of the day. And by the beginning of the day I mean, if possible, before even checking your email. If your entire list does not fit into your calendar, reprioritize your list. There is tremendous power in deciding when and where you are going to do something.If you want to get something done, decide when and where you're going to do it. Otherwise, take it off your list.

STEP 2 (1 minute every hour) Refocus. Set your watch, phone, or computer to ring every hour. When it rings, take a deep breath, look at your list and ask yourself if you spent your last hour productively. Then look at your calendar and deliberately recommit to how you are going to use the next hour. Manage your day hour by hour. Don't let the hours manage you.

STEP 3 (5 minutes) Review. Shut off your computer and review your day. What worked? Where did you focus? Where did you get distracted? What did you learn that will help you be more productive tomorrow?

The power of rituals is their predictability. You do the same thing in the same way over and over again. And so the outcome of a ritual is predictable too. If you choose your focus deliberately and wisely and consistently remind yourself of that focus, you will stay focused. It's simple.

The full article is at blogs.harvardbusiness.org

 

Filed under  //   Entrepreneurship   Productivity  

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Seeing Both Sides: In VC deals, Price Doesn't Matter - But The "Promote" Does

VC negotiation advice from Jeff Bussgang:

In VC deals, Price Doesn't Matter - But The "Promote" Does

VCs have an unfair advantage when it comes to financings.  They simply have more experience doing deals.

A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending).  A typical serial entreprenur may lead 2-3 companies in their career before calling it quits (or checking themselves in to an insane asylum).  Thus, the universe of financings that even the most experienced entrepreneurs get directly exposed to is typically 5-10 financings over a 15-20 year career.  In contrast, the typical venture capitalist, either individually or across their partnership, will do 5-10 financings in any given year.  Year in, year out.

Thus, VCs and entrepreneurs are not operating on an equal playing field when it comes to negotiating financings and interpreting the impact of the terms involved.

One area that has always struck me where this assymetrical relationship comes into sharp focus is when there's a discussion around the price of the deal.  Entrepreneurs often mistakenly focus solely on the pre-money valuation while VCs look at multiple knobs in the negotiation to drive to a set of terms that, in total, they find acceptable.  And if they don't focus on the pre-money, they focus on their ownership position after the financing, irrespecive of the amount of capital that was raised.

In my partnership, we've come up with a new term (I think it's new - I don't see it written or talked about much) called the "promote" to help communicate with entrepreneurs the real value behind a particular deal so get them to step back from concentrating only on the pre-money valuation or post-money ownership.

What is the promote?  ...

 

Filed under  //   Entrepreneurship   Strategy  

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Guy Kawasaki's Business Plan Zen

Here is a slightly abreviated excerpt of Guy's advice on writing a startup business business plan:

  1. Write for all the right reasons. Most people write business plans to attract investors, and while this is necessary to raise money, most venture capitalists have made a “gut level” go/no go decision during the PowerPoint pitch. Receiving (and possibly reading) the business plan is a mechanical step in due diligence. The more relevant and important reason to write is a business plan, whether you are raising money or not, is to force the management team to solidify the objectives (what), strategies (how), and tactics (when, where, who). 
  2. Make it a solo effort. While creation of the business plan should be a group effort involving all the principal players in the company, the actual writing of the business plan--literally sitting down at a computer and pounding out the document--should be a solo effort. And ideally the CEO should do it because she will need to know the plan by heart.
  3. Pitch, then plan. The correct sequence is to perfect a pitch (10/20/30), and then write the plan from it. Write this down: A good business plan is an elaboration of a good pitch; a good pitch is not the distillation of good business plan. Why? Because it's much easier to revise a pitch than to revise a plan. Think of your pitch as your outline, and your plan as the full text.
  4. Put in the right stuff. Here's what a business plan should address: Executive Summary (1), Problem (1), Solution (1), Business Model (1), Underlying Magic (1), Marketing and Sales (1), Competition (1), Team (1), Projections (1), Status and Timeline (1), and Conclusion (1). Essentially, this is the same list of topics as a PowerPoint pitch. Those numbers in parenthesis are the ideal lengths for each section; note that they add up to eleven. As you'll see in a few paragraphs, the ideal length of a business plan is twenty pages, so I've given you nine pages extra as a fudge factor.
  5. Focus on the executive summary. The executive summary, all one page of it, is the most important part of a business plan. If it isn't fantastic, eyeball-sucking, and pulse-altering, people won't read beyond it to find out who's on your great team, what's your business model, and why your product is curve jumping, paradigm shifting, and revolutionary. You should spend eighty percent of your effort on writing a great executive summary.
  6. Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. For every ten pages over twenty pages, you decrease the likelihood that the plan will be read, much less funded, by twenty-five percent. When it comes to business plans, less is more. The reality is that the purpose of a a business plan is to get to the next step: continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.
  7. Provide a one-page financial projection plus key metrics. Do everyone a favor: Reduce your Excel hallucinations to one page and provide a forecast of the key metrics of your business--for example, the number of paying customers. These key metrics provide insight into your assumptions. 
  8. Catalyze fantasy. Don't include citations of some consulting firm's supposed validation of your market. For example, “Jupiter Research says that the market for avocado-farming software like we make will be $10 billion by 2010.” What you want to do is catalyze fantasy: that is, enable the reader to make her own mental calculation that this market is big.
  9. Write deliberate, act emergent. This means that when you write your plan, you act as if you know exactly what you're going to do. You are deliberate. You're probably wrong, but you take your best shot. However, writing deliberate doesn't mean that you adhere to the plan in the face of new information and new opportunities. As you execute the plan, you act emergent--that is, you are flexible and fast moving: changing as you learn more and more about the market.
Read more at: blog.guykawasaki.com

 

Filed under  //   Entrepreneurship   Management   Strategy  

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What Is Web 2.0?

Although this paper is getting old, it remains important to understand the context for emerging applications, business models and consequences we see with the web today, such as the disruptive effects of social media.

What Is Web 2.0 Design Patterns and Business Models for the Next Generation of Software
by Tim O'Reilly
09/30/2005

The bursting of the dot-com bubble in the fall of 2001 marked a turning point for the web. Many people concluded that the web was overhyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions. Shakeouts typically mark the point at which an ascendant technology is ready to take its place at center stage. The pretenders are given the bum's rush, the real success stories show their strength, and there begins to be an understanding of what separates one from the other.

The concept of "Web 2.0" began with a conference brainstorming session between O'Reilly and MediaLive International. Dale Dougherty, web pioneer and O'Reilly VP, noted that far from having "crashed", the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What's more, the companies that had survived the collapse seemed to have some things in common. Could it be that the dot-com collapse marked some kind of turning point for the web, such that a call to action such as "Web 2.0" might make sense? We agreed that it did, and so the Web 2.0 Conference was born.

In the year and a half since, the term "Web 2.0" has clearly taken hold, with more than 9.5 million citations in Google. But there's still a huge amount of disagreement about just what Web 2.0 means, with some people decrying it as a meaningless marketing buzzword, and others accepting it as the new conventional wisdom.

This article is an attempt to clarify just what we mean by Web 2.0.

In our initial brainstorming, we formulated our sense of Web 2.0 by example:

Web 1.0   Web 2.0
DoubleClick --> Google AdSense
Ofoto --> Flickr
Akamai --> BitTorrent
mp3.com --> Napster
Britannica Online --> Wikipedia
personal websites --> blogging
evite --> upcoming.org and EVDB
domain name speculation --> search engine optimization
page views --> cost per click
screen scraping --> web services
publishing --> participation
content management systems --> wikis
directories (taxonomy) --> tagging ("folksonomy")
stickiness --> syndication
Read the rest of this paper at: oreilly.com

 

Filed under  //   Entrepreneurship   Society   Technology  

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