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 Entrepreneurship Insights

August/September 2014

Welcome to the latest bulletin offering entrepreneurial insights from the Startup Owl. Enjoy and learn. This issue is mostly about enterprise growth and decline.
Stunning Startups
Ah-ha Moments

Stunning startups abound to answer very arcane needs and wants. Not all of them come from hi-tech wizards. Many come from intuitive people having 'ah-ha' moments. Others that we know well, like 3M's sticky notes, resulted from results by something going wrong.

 

One interesting example is the linestanding sector. Linestanding companies, like linestander.com and Washington Express will provide you with people who will stand in line for you, so that you can be at the head of the line without actually being there. The clients are generally the affluent or time-constrained: a lobbyist who want to to be in the front row of a congressional hearing, or a businessman who cannot spare the time to queue for a visa renewal. In response to the demand, there are now companies supporting linestanding companies, by offering to recruit the linestanders. They meet another demand-that for work among the unskilled unemployed. People got linestanding jobs via TaskRabbit to wait for the release of the latest iPhone.

 

Meeting the Niche

 

If you are a city apartment dweller or a septuagenarian like me, you may be greatly attracted by the Oru Kayak, an origami kayak, originally funded by the crowdfunding platform Kickstarter. It responds to the adventurer who has nowhere to store, or no suitable vehicle to transport a boat from home to the water. It's light, folds to the size of a suitcase while maintaining high performance quality of good tracking and rigidity.

 

Septuagenerians are not themselves immne fron starting businesses. Art Koff retired at 65, like many people, but couldn't face not working and knew that lots of other older people were in the same boat. So he started a job board, when he was 72, for older people called Retired Brains in 2003. Ten years later it is still going strong - and so is he.

 

Science at Work

 

We all have tended to doodle at some stage in our lives, from childhood to dotage. Some people have taken it to a high art form or graffiti as urban d�cor. Have you ever thought of 3-D doodling? Maybe building things with matchsticks is the nearest you have gotten. A toy designer and an MIT engineering professor have produced the 3Doodler pen than enables you to doodle in three dimensions. Just as two dimensional doodlers, users of the 3Doodler can produce art, jewelry or other art forms, even to decorate the urban jungle.

 

Imagine applying something to glass that makes it intelligent. Intelligent glass? The nearest I ever came was to paint lime on my greenhouse in the summer to stop my plants being burnt. Cloud Gel is a unique glazing material that automatically controls the amount of light and heat let in through skylights, generally used in large single-story buildings like big box stores and factories. It was developed by Suntek and can also be used for greenhouses and sunrooms. One of the results of its use is that a significant saving on lighting a space can be saved without a commensurate increasing in air-conditioning costs.

 

Or intelligent sneakers? Lechtal (in Hindi = 'take me along') sneakers by Ducere Technologies are haptic interactive footwear. What's haptic? It is of or relating to the sense of touch, in particular relating to the perception and manipulation of objects using the senses of touch and proprioception. The company is a pioneer and an innovative brand in wearable technology and these shoes give their wearers detailed analysis of their physical activity.


 

Doing Real Good

 

Ken Puzey has prototyped a solar water boiler that is very simple and inexpensive. It is comprised of a vacuum tube that acts like a thermos and a stainless steel collector to concentrate sunlight onto the vacuum tube. The vacuum tube is similar to the technology used in solar hot water heaters. So simple it can be used in places with no utilities. It's safe because you can touch the tube while the water inside is boiling, It's cheap to make and set up. It had to be because the idea came to Ken while he was on a medical mission in Haiti and he is now raising funds for its use at the Kisumu Safe Water Project in Kenya.

 

And while we're in the environmental field, consider GreenWave's network of ocean farmers, social entrepreneurs and advocates that are working to jump-start a new ocean economy that meets the growing need for sustainable seafood, habitat restoration and resilient communities in the era of climate change. It's business and social activism rolled into one. It was founded by Bren Smith, GreenWave Executive Director and owner of Thimble Island Oyster Co., has pioneered the development of sustainable 3D ocean farming. 

Raise the Bridge, or Lower the Water
Ready, Fire, Aim

Strategy is tough for entrepreneurs when they love their product so. When approaching strategy with entrepreneurs, I have a tendency to ask them how small can they start, rather than how much money do they need? Isn't that a bit demotivating? Not at all. I want them to succeed, not burn and crash. With the exception of hi-tech, or other capital-intensive startups, most new businesses do best by starting with baby steps, gaining their balance and learning to walk steadily, before trying to run.

Today, with the cost of producing minimum viable products dropping through the use of the web, 3-D printing, and apps, big money raising at the start is less and less necessary.

The knee-jerk reaction of most people starting businesses is to spend huge amounts of energy on trying to raise equity and loan money, when they could be out selling and interacting with customers, or figuring out why prospects are rejecting their offers.

Lowering the water-keeping costs down, bootstrapping and sticking to the essentials, like 'getting out on the road' makes a lot more sense at the outset. Raising the bridge-building infrastructure, seeking equity and planning for growth can come at the right time, once the footings are sure. Build value first, fund when you're ready.

Most dictionary definitions of the word entrepreneur, refer to a person who takes risks. Taking risks sounds to me like the rock climber who does not follow the simple rule of only moving one limb at a time. Foolhardy might be a better word for that kind of business person

Risk Mitigation

Whenever I have started a business I did indeed take calculated risk, but never risks, period. For instance, when I started my first business in 1982, I was in my mid-thirties, with five kids and a couple of mortgages, but I was very confident of my abilities and if indeed the business did go belly-up, I could always find myself a job to support the family.

So, while the company was always at risk, I never gave a bank a personal guarantee, nor did I use personal credit cards to fund the business. Had I loaded them with debt, that would have stayed with me in the case of business failure, just as a personal guarantee would threaten the family home. This was a form of risk mitigation.

Mitigating risk is often more effective than profit maximization. Lean Startup professionals push the new business to fail early and often, getting out into the marketplace fast and learning from customer feedback. The same applies to relationships with other stakeholders. If you seek a co-founder, don't over-negotiate. Try something together and see how it goes, before moving on to something deeper. Think carefully about what wouldn't work and test it out.

Profit Addiction

A lot of startup entrepreneurs that I meet, make a great to-do about profitability, early break-even and produce spreadsheets of income statements showing exponential growth in profits from month one. They will be sorely disappointed. This comes from the mis-guided notion that they have to do that, rather than demonstrating positive cash flows through the early stages.

This blind addiction to striving for profit from the get-go masks another sort of risk. It is likely to impel charging high prices to achieve high margins, when the better route might be to look at reducing unit costs, or increasing volume through lower prices. Staying alive needs the entrepreneur's full attention.

The customer must love you and come back for more, not admire you for your business investment acumen. Understanding what will get in his way should be a top priority. This means focusing on his needs, not your desires--or even those of your backers or bankers!

Hindsight, Foresight, Insight

Avoiding surprises sounds like a pretty depressing pastime, but it's not. Strangely enough, as behavioral scientists will tell you, we have a natural propensity to be more creative when thinking negatively, rather than positively. Your brain is simply built with a greater sensitivity to unpleasant news. Research tells us, bad feedback has much more of an impact than good feedback.

Those of you who have practiced brainstorming, will have noticed that a team will come up with more reasons why something won't happen than reasons that they will. This is also true when working on a force field. You'll get more resisting forces than driving ones. 

So, a startup should use the ability to dwell on what did not go well in the past (hindsight), to develop opportunities to succeed against the odds of getting things right, through foresight that so often seems to let us down. It turns out that kicking away the chocks propels the business forward even better than the best laid plans.

A good way to think about strategy is to first analyze failures through hindsight, then with the knowledge gained applying foresight, before being able to develop insight. The best strategists are thus able to both raise the bridge through planning, at the same time lower the water by mitigating risk.

Thanks for reading this issue of Entrepreneurship Insights. If you have any comments or would like help with your startup, do write to me: will@startupowl.com

Sincerely,
 
Will Keyser
a.k.a. The Startup Owl

In This Issue
The Magic of Mentors
Take a look at these ten slides for some of the reasons why.
Mentors will often tell you that they don't really
do anything. And that's the way it may look.

Mentors listen supportively and ask lots of questions. These questions, though, come from the mentor's experience, which can't simply be transferred by instruction.

Sometimes the entrepreneur thinks she needs help with marketing, but the questions lead to tackling much more fundamental questions about the value proposition. The mentor's questions will be open-ended and while he may seek to point out a flaw, it will be the entrepreneur herself who spots it.

A question that is tough to answer may lead to a re-ordering of the entrepreneur's priorities, sharpening the focus of the jumbled to-do list that daunts the startup.

An innocent question might be around creating value by examining the disruptive innovators in unrelated sectors. It might be something like, "Have you thought about services that use underutilized assets, like zip car or airbnb?"

The magic does not happen without effort by the entrepreneur as well as the mentor. It'll be another 'investment', but one that pays off handsomely.

Will
 
 
 
 
 
 
 
 
 
 
Telling Startup Stories: Keep the End in Mind
by William Keyser
Kindle ebook Edition
Make your startup pitch the most persuasive by learning how to tell your best story.

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