An Open Mind

(Not) All Digg Users Are Created Equal

"All animals are equal, but some are more equal than others." This sentence is part of a masterpiece that is an important conclusion to a series of masterpieces. The road to popular rights, freedom and equality was lead by many masterpieces, from The Constitution of the Athenians, the Roman Republic, the Magna Carta, the American Declaration of Independence, the French Declaration of the Rights of Man and of the Citizen, the American Constitution, the Communist Manifesto, and many more.

The internet opened up a new frontier for personal expression and worldwide democracy. The wave of user-generated content gave any of us the opportunity to be heard in almost unparallel equality. Finally, the promise of humanity sharing information through websites such as Wikipedia and others made popular ownership of information a consensus.

Until something like this happens. A Digg story was pulled down accompanied by a user’s termination of membership and a note by Digg’s co-founder Kevin Rose on the official Digg blog, a note which I think he’s already sorry to have posted.

As a person who is highly involved with user-generated content startups, I understand the reason behind the issue of content somehow harming a third party; we have rules regarding “copyright theft”, “intellectual property infringement” and “tortuous interference”. All are important and should be honored. However, not at the expense of your users – honor the law, but also honor your community. Users have been removed before for seriously bothering other users – that’s understandable. But don’t remove users just because they bother you.

Most importantly – honor yourself.

I fully agree with Ayelet’s remarks and suggestions, posted on her blog, which is a wonderful blog, by the way. Make this a public battle – score points on the pulpit of popular demand. The minute you quarantine your community and sanction their freedom, then you will have turned your effort for real web democracy into an empty gesture.

George Orwell's Animal Farm teaches us a lesson on how good ideas of freedom and equality can turn really ugly. Let's learn from that.

Open Mindedness - Growth Mindset

Take a look at this post on Guy Kawasaki’s blog; it includes a great diagram that describes the difference a fixed and growth mindsets, from Professor Carol Dweck’s book Mindset: The New Psychology of Success. Visit Kawasaki’s post for more details.

In the process of natural selection of entrepreneurs, choosing an open-minded mindset is a cardinal rule. Having this diagram printed and posted in front of you can do you nothing but good.

Ira Glass and Telling Your Story

One of my favorite blogs is Garr Reynolds‘ Presentation Zen. Garr displays a true multidisciplinary approach to presenting, showing, telling and displaying your ideas to other people. Garr, through many of his posts, talks about ways to communicate ideas and tell stories, that not only deliver information and details, but approach the audience on other levels – conceptual, visual, and emotional. Garr is extremely generous with his knowledge and philosophy, and prefers writing essays instead of short posts (not unlike present company). I warmly recommend adding Garr’s blog to your list of favorites.

I came across this post of Garr’s a few weeks ago, listing a set of videos Ira Glass, the host of This American Life. In these short clips, Ira shares many insights on the life of a radio broadcaster, but more relevantly, about telling a story.

Make sure you watch Ira’s videos and read Garr’s commentary and remarks; they hold great wisdom and may enrich your skills of captivating an audience. Entrepreneurs must be good storytellers, as they need to sell a vision, a dream, and often convince others with something that is still abstract and maybe out of reach.

Problem vs. Value

My older sister is a biologist; I fondly call her “my biologic sister.” She does research at Albert Einstein Institute in the Bronx, NY, where she works on finding out a certain cellular behavior that may cause breast cancer. This research, once it provides fruitful results, may lead to a significant leap forward in our understanding of breast cancer, and, hopefully, take us one step closer to finding a cure.

I’m proud of my sister; nearly every day, when I’m doing what I do, and feel as if I’m bringing some value to this world, I stop and tell myself “my sister is working on a cure for cancer.” Now there’s a noble cause.

When working on your venture, many times you’re being asked “what does your product solve that needs solving?” You may notice that many business plans and presentations start with a separate section called “The Problem.” In this section, entrepreneurs are trying to describe an imperfect world, and how their solution makes this world livable again.

Starting off by spelling out a problem that your product is here to solve is, in my opinion, counter productive to the entrepreneurial challenge and thinking process. Here are the three reasons for it:

• It’s Negative. By describing a problem, you paint a sordid picture; it makes you focus on criticism and negative thought, while you should be making an effort to think constructively.
• It’s Argumentative. Even if you find good points that states out real problems, presenting them to others (VCs, partners, customers) creates a debate – even if you do not wish it so. For every point against a subject, one can always find a counterpoint. And believe me – there will always be people around you who will attack those points.
• It limits your thinking. Thinking negatively creates a sort of anti-world in your mind, where the boundaries that need breaking are defined by problems that you identified. When working on creating a solution to a problem, you actually define your solution by the problem. This limits your thinking to the negative aspects of your solution, and sometimes, when the problem has been actually solved by your product, you will find it hard to see beyond the solution. You may find it hard to think beyond the boundaries of the problem you’ve adopted as your identity.

Don't think problem - think value

Indeed, identity is the key word; do you wish to define your solution in negative, argumentative, and limiting terms of a problem? Frankly, most of us are not out there to cure cancer; we try to provide a service, a product that adds value to the world, that opens up new opportunities for people to do things the either couldn’t, found it hard to do, or just didn’t see as worth doing. Your identity as a solution provider should not be defined through problems, but through value.

Value may be the opposite of problem, with the one being positive and the other negative. I suggest you focus on defining the value that your product is out there to deliver. Yet sometimes we are so fixed on thinking negatively, considering problems and their cures that we find it hard to break free.

A good technique to help you clear your head of the problem issue would be to lay out the problems, one by one, starting with the word “No”: “No real tool for searching socks on the web,” or “No common place for people to gather around and discuss Latin proverbs.” After you have purged all the “negativeness” out of you, and released all the frustration you have of this world that has to endure another day without your product, simply replace the “No” with “A”: “A real tool for searching socks on the web,” and “A common place for people to gather around and discuss Latin proverbs.” There’s a value proposition.

A positive approach is better, in my mind, to create a constructive environment with VCs, customers, management or team. Value puts you in a position where you do not solve problems, but create new meaning, a new approach. And isn’t “new” the reason why you have decided to become an entrepreneur in the fist place?

The Analyst – the General in You

Many times I have seen analogies being drawn between business and war. Even the terminology used by businesspeople when discussing market objectives and roadmaps is tightly associated with warfare: strategy, tactics, defensive, offensive, capture, destroy, etc. People often talk of “aggressive campaigns” and “hostile takeovers”, as it is part of our collective symbolism to regard market acquisition as conquest and revenues as spoils of war.

Sure enough, when considering the marketplace in your venture, the analyst in you has to step in and take charge. As part of the group of personalities that the renaissance entrepreneur possesses, this one is in charge of knowing the marketplace and planning ahead; and as the analogy suggests, when stepping into the shoes of your analyst, you wake up the general in you.

I often look for inspiration in the ideas and thoughts of people who have achieved great things. Many have written about war, about business, about war and business, from Carl von Clausewitz to Norman Schwarzkopf, Jr.  But they all stand on the shoulders of one great man and one great book – Sun Tzu and The Art of War. Written over 2,000 years ago in China, Sun Tzu’s insights and methodology are still relevant in today’s valid battlefield – the marketplace.

There are two passages that are ever more relevant in strategic business-market thinking, that provide perspective into the two major aspects of the analyst’s job – planning a marketing strategy, and approaching the issue of competition.

"Generally in war the best policy is to take the state intact; to ruin it is inferior to this." (III.1)

Naturally, to make this relevant, the “state” can be simply replaced by the “marketplace.” Undoubtedly, a company’s battlefield is the marketplace, with a goal of acquiring its share of the market to generate revenues. It is important to define this market segment, to identify the category that the company is playing in, and to point out the value that the product is offering this market segment. However, when starting to think like a general, one must keep in mind that the market has value to the company as long as it’s intact. Ruining it to win it will only result in failing.

I have seen many times how companies try to capture market share aggressively, and destroying it in the process. Most often this is done by cannibalization – either of value or of cost. A company could provide an inferior product for a lower price to conquer its market share, but ultimately end up with a wasteland. The market was won, no doubt, but now the product’s price and value are at such a low point that it is often hard to rebuild and restructure. This strategy is characterized by short term thinking, usually by trying to show a significant rise in sales to please management/board/press; it can’t be helped though – once the market has been destroyed, it is hard to rebuild both by your company and your competitors.

Therefore, when planning your strategy, try to focus on two things:

1. Positioning. The better you define your place in the market, your category, segment, and demographics, the higher your chance of planning your strategy. This should be combined with focus – the narrower your market segment is, the better your chances are to acquire it.
2. The value rolodex. Try to offer good value for your product, and always keep it coming. Don’t offer it all at once – try to give just about enough so that your customers are happy, and keep the next punch – killer feature, sales campaign, new product – for the right time. It will keep your customers intrigued, your market pulsing with new value, and your competitors puzzled and trying to keep up.

“Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and of yourself, you are certain in every battle to be in peril.” (III.30-33)

Competition; even though this is peacetime, and we are all doing our best to conduct business in good faith, your competitive strategy should heed Sun Tzu’s advice by thinking of competitors as enemies.

The more you know of them, the better you can plan ahead. This is especially important in the first foundation stages, when the entrepreneur is fully excited with an idea and is sometimes driven to distraction, failing to see how the marketplace is built and what other players are out there. Here are three common mistakes that the general in you should know to avoid:

1. Identify your competition. Do your homework; explore, research, delve deep. Find out exactly who your competitors are, what they do, and how their position affects your position. Dig deeper – who are the founders? How were they funded? By whom? Where are they located? What’s their market share? And most importantly – how are they compared to you?
2. It’s not the product – it’s the strategy. This mistake is very common, mostly made by highly technical entrepreneurs. They usually think that if their product, or worse - their technology, is superior (more advanced, has more cool features, shines like the sun), it is inevitable that the market will follow them. To this there is but one response: I’m pretty sure there are better hamburgers out there than McDonald’s. At the end of the day, your market success is only as good as your marketing strategy. The product only serves that strategy, not vice versa.
3. Avoid mistaking competitors for boulders. Many times I heard people utter sentences like “oh – they can’t do that, and they never will.” The fact that you know what your competition has to offer today, does not mean you know how they will change it tomorrow. Try to put yourself in the competitor’s marketing analyst - your counterpart’s – chair, and do your best to think like they do. No company has ever succeeded for too long by stagnating. In this fast-paced, ever-changing market, even your competitors have to move forward to survive.

Do yourself a favor – read the book. It is essential for the general in you. It’s not too long, and – believe me – will blow your mind away. If anything, it will give you a few cool anecdotes to throw into the air when trying to impress colleagues, boss, dates, or people you’ve met in a conference.

On second thought – bad idea for dates.

Seth Godin's realistic entrepreneur's guide to venture capital

Seth Godin needs no introduction.  The man's brilliant, and one of my favorite bloggers.  His blog is a must for every entrepreneur.

This post says probably what we all found out when raising funds from VCs.  Many truths, looking right at you without blinking.

I'll just add one more conditions to Seth's list:

• Venture capital funds hate to lose money.  Not only is (most of) the money not theirs to lose, but usually someone gets fired when these things happen.  So they'll do their best so it won't happen.

Also - this is Seth's 2,000th post - congrats!  Don't ever stop making us all look bad.

The Hundred-Dollar Bill Story

I had once heard a story that forever comes back to my mind when going to a presentation or an important meeting; I’m not sure if I remember it in detail, but the essence is there:

Once upon a time, a young man started dating a young woman. Things were going pretty well, and even starting to get serious.

One day, our guy asked his roommate: “say – my girlfriend and I are supposed to go meet her parents tonight - I'll be meeting them for the first time; we’re going out to dinner. I haven’t received my paycheck yet – could you please lend me a hundred dollars?”

The roommate promptly agreed, and took out a hundred-dollar bill from his wallet and handed it to his friend, who in turn folded it and put it inside his trouser pocket.

Hours later, our young suitor came back from meeting his girlfriend’s family, to find his roommate sitting in the living room, watching TV.

“How was it?” the roommate asked.

“Not too bad. Her dad’s a good man. Oh – before I forget – here is your hundred-dollar bill back. Thanks again!”

The roommate looked at the note given to him. “Didn’t you say you were not paid your salary yet? Did you get the money someplace else?”

“No. Actually, it’s the exact same note that you’ve given me,” said the guy. “I didn’t use it; in fact – I wasn’t planning on using it.”

“So why did you ask me for it?” asked the roommate, puzzled.

“Simple: when I go out to meet my girlfriend’s father for the first time, I feel a whole lot more confident doing it with hundred-dollar bill sitting in my pocket.”

---

Whenever you go to meet someone, whether it is a private investor, a venture capital firm, a prospected client, a potential partner, a news reporter – try to find your hundred-dollar bill to put in your pocket. Whether you’re an entrepreneur or a corporate employee, there are many events in your professional (and personal) life where you need to have that small amount of assurance as to your value as a person who represents and idea you believe in.

It could be an achievement you’ve made; a sale you once closed; an idea of yours that came through to execution; a product you’ve championed. Whether it is a personal accomplishment or professional success, it is always good to have that positive outlook that tells you “even though I’m about to meet the most important people in the world, who have done great things, moved mountains and poured oceans into valleys, I know that I have something to show for as well.”

Even if that hundred-dollar bill will forever stay in your pocket, you will know that it is there.

The Spirit, the Camel, the Lion, the Child

I’ve read a bit of philosophy in my day. Much of it I hardly understood, most of it I enjoyed thoroughly. It was Nietzsche who caught my attention when writing about the spirit’s three metamorphoses. This was, obviously, part of his “Thus Spoke Zarathustra.”

In his description, he told of the three stages the Spirit goes through to achieve a certain completion and peace. Reading it, I couldn’t help but notice a striking resemblance to the stages an entrepreneur goes through when giving birth to an idea.

To me, the spirit represents the spark that is lit along with an idea that springs into mind. It grows to fill you up, lights your insides with thrill and meaning, and starts showing you that it carries a great deal of value. It motivates you to move forward, start exploring, start asking questions. It is then that the spirit transforms into a camel.

The camel, according to Nietzsche, wants to be laden with questions, with worries and doubt. It seeks the opinion of others, looking into their eyes, telling them “burden me with your worries – I’m capable.” It takes all it can carry, and then adds more questions of its own. These questions pick at its mind, and just before the last straw is added, it rises to its feet and runs into the wilderness. Laden with questions, doubt, and fear, it confronts the questions and self doubt by turning into a lion.

There, all alone with its thoughts and fears, the lion is born, and fights its way to dominate its realm. It shakes the questions and attacks them, yet its biggest fight is internal – fear, self doubt, lack of confidence and belief in its right to break through. All this appears in front of it in the form of a dragon, whose name, sure enough, is “Thou-shalt”.

And the lion, a beast of pray, is fully armed to fight that dragon, and splitter its armor made of golden scales. It tears at the most fundamental questions, the most basic and trivial rules that all of a sudden seem arbitrary. Until the dragon is all but an illusion, and the lion has done its duty. Only then, does the child come into being.

The child represents a new beginning. After carrying the burden of others, after battling its demons, the child is there, forgetful of its trials yet full of wisdom to start creating.

Anyone who has ever created, founded, experienced true entrepreneurship, will recognize these metamorphoses as inner battles long fought. It is always important to remember that burden will amount to loads, fears will become dragons, yet the spirit can be transformed to carry and vanquish, and come out as pure, complete, and sure as a child.

But, as philosophy goes, I may have gotten it entirely wrong.

Presentations and Pitches, RE Style

And by RE I mean Renaissance Entrepreneur, a term coined and slightly explored in the previous post of this blog. 

I'm sure many people who read this have already read Guy Kawasaki's famous 10/20/30 Rule of PowerPoint;  in case you haven't - you must.  When creating a presentation, especially when that presentation is aimed at venture capital funds, these rules must apply.

I have often found that presenting an idea, from an entrepreneur's standpoint, requires quite a lot of energy on the presenter's part - and this is even before she has actually set foot in the conference room.  Constructing a good presentation is a journey, one that challenges and demands focus.  The constant battle that rages inside the entrepreneur's mind - belief vs. doubt, vision vs. practicality - often serves as a frustrating inhibitor.

A pitch, delivered through a presentation, is probably the most important instrument used to create a positive first impression, and we all know that there's no second chance to make a first impression.  When a potential investor meets you, and allows you to present to her with your idea, she often looks to see certain things, both in the presentation itself, but most importantly in you as a founder.

With the four elements of the renaissance entrepreneur in mind, we can now divide the presentation into corresponding 4 sections, each representing a different aspect of the business.  This division has helped me get into the right mindset when both creating and presenting my pitch. 

1. Vision.  Naturally, investors want to be inspired by your passion, and to see the visionary in you.  This is the part where you show your vision and creativity.  It is where you describe the general vision of the product, the need that exists in the world for it, and the way your product addresses that need.  So this basically covers slides that discuss the overview, the problem and the solution.
2. Analysis.  Vision has to be backed up by facts, and this is the time to get into the analyst's head and do your homework.  It's quite hard to rebound from unanswered investor questions that show how poor your research has been.  Work hard on acquiring all the data to construct slides discussing the market, opportunity and competition.
3. Business.  Now it's time to show how money's being made, and where the businessman in you should emerge.  That side of your personality should combine the things said by the visionary and the analyst into a business, showing slides about the business model and the projections of your business.
4. Management.  Finally, you should make sure your audience knows that the money they are asked to give you will be used by professional managers.  Your investors expect to see you as a person who can handle a team, and work with a budget and a roadmap.  With this thought in mind, show slides covering the team (including the professional advisers you employ), budget (how wisely you will spend their money), your planned roadmap and current status.

I suggest you divide both your work and your presentation into 4 parts, each corresponding to the 4 personalities of the renaissance entrepreneur as described before.  When creating the pitch and presentation, do your best to work on each part individually, so you may both be placed in the right mindset to accomplish your goal, and not be bothered by other sides of your personality barging in.  For example - when polishing your vision slides, the manager in you needs to keep quiet.

When pitching in front of people, it is good to switch between the different personalities according to the subject matter being discussed.  If the audience wishes to discuss the business model, try conducting a conversation as a businessman, and not as a visionary.  The order of your presentation slides could also be governed by that principle, allowing you to change the manner of your presentation in an orderly fashion, instead of being all over the place.

The 4 Elements of the Renaissance Entrepreneur

The Renaissance Man is a strange term, derived from the European Renaissance period, where the proper education (of gentlemen) consisted of many topics in various fields, mainly literature, poetry, music, languages and so forth.  It was a time where a broad view on things was encouraged. Also, interestingly enough, artists of that time came up with a concept that is forever a useful thing in entrepreneurship - perspective.

Professionalism has always been a virtue.  We are constantly being encouraged to learn a trade, focus on something until we master it to a degree where we can expect others to compensate us for our services.  When looking at an organizational chart, you will see people categorized according to their function - the value of their trade represented as a position inside the company.

Entrepreneurs are usually professionals with a clear vision, drive, and strong will.  Yet professionalism alone is not always enough to allow entrepreneurs see the big picture, clear their heads, and take an idea into execution.  The model of the Renaissance Entrepreneur, a concept that I have been trying to live by, attempts to create a holistic approach to entrepreneurship, and combine several aspects that are crucial to anyone who wish to found a company, and make something out of nothing.

The renaissance entrepreneur has 4 elements in her:

1. The visionary.  This is often easy to find, as entrepreneurs usually are governed by a passion to create, and have an overview of the idea they wish to bring to life.  This element rules the heart, while keeping the head high in the clouds, thinking, expanding, exploring.  It is the romantic spirit of the entrepreneur, and the part of her that keeps up faith, hope, and perseverance.
2. The analyst.  The antithesis of the visionary, the analyst rules facts with a firm hand.  This is the element that explores market data, studies growth factors, gathers information about consumer habits, and deciphers technical analysis. The facts gathered by the analyst help the entrepreneur with battles that require a certain amount of proof, providing real world information that is an essential part of any initiative.
3. The businessman.  This element rules the pocketbook.  An idea could be far reaching, could be shown as acceptable by the market, yet is worth very little if it has no way of making money, or providing some sort of profit to those who engage in its execution.  The businessman in the entrepreneur should always keep an ear out for opportunities to capitalize out of an idea, and come up with business models to fit both product and market alike.
4. The manager.  Finally, the entrepreneur should be aware that a business is only as good as it is managed.  Poor management could take the best idea, with the clearest vision, addressing a promising market with a great business model, and make it vanish like a puff of smoke.  There is nothing worse than a wonderful idea that failed due to poor management.  Great management is priceless, and a necessity for a successful execution of an idea into a company.

These four element, though quite helpful when existing inside a single body of an entrepreneur, are not necessary to make a person into an entrepreneur.  However, the founder is advised to be aware of them, identify the different aspects of her personality that correspond to each element, find out her strengths and weaknesses in relations to these element, and where she may need assistance through the help of her co-workers.

This is a brief summary of this concept of the renaissance entrepreneur.  In the next posts, I will provide more in-depth analysis to each one, and show how these elements could come into play when putting on an entrepreneur's hat and making an idea materialize.  Also, when writing more about the path of founding a company, I will often relate to these terms and how these elements could be applied in order to focus on specific tasks and gaining the right mindset and perspective to complete them.