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Posts Tagged ‘Listening’

breakingthroughAs we’ve outlined on this blog over the last few weeks, the system for raising early stage capital today is fundamentally flawed. Even though the road to success for entrepreneurs trying to kickstart their visions is littered with potholes and deceptive directions, it can all be corrected with a little teamwork. If change is going to happen, we can’t just tease the entrepreneurial community with brief moments of candor and transparency. The only way we truly accelerate the rate at which that innovation is created in this country and solve our financial crisis is for us to come together and provide enormous value back to the very entrepreneurs from which we expect that innovation to come. By the way, that busted road we mentioned…it’s a two-way street.

So without further ado, here, in no particular order, are North’s 10 Rules for Breaking Through:

1. Listen To The Challengers, Not Just The Congratulators.

listentoyourcriticsTurning an idea into an actual operating company is hard work. So make it easier on yourself, bounce your concept off those people that have no problem ripping it apart. Seriously, if all you do is play “show and tell” with your trusted inner circle are you really going to learn anything new? Feedback from candid and objective outsider can often make the difference between your business growing and maturing vs. remaining underdeveloped. Are you listening?

2. Don’t Buy Anything That Doesn’t Provide Value Back.

As mentioned throughout this paper, there are a ton of services marketing at entrepreneurs, especially those that pitch the promise of raising money or connecting you with investors. However, before you take the plunge (or get out your credit card) ask yourself a simple question, “am I getting useful value back?” What you’re doing is hard and takes a lot of time, don’t waste it. Surround yourself with experts that can inspire and help you reach your goals.

3. Those With Fewer Words Win.

We can’t express enough the importance of being able to concisely state your business idea in a very persuasive manner. Investor’s have limited time and even a more limited attention span (do you know how many pitches they hear a day?). If your “single sentence” about what you do and how you make money is confusing, you’ve wasted your breath and other’s time. Take time to dial this in. The results will follow.

4. Talk To Anyone Who’ll Listen.

Okay, quit hiding behind your laptop screen and go talk to people. If you’re too remote and working from a tropical island somewhere (good for you), but at least pick up the phone. Investors know each other and if you talk to large number of them it can actually create more buzz about you and your concept. Healthy competition is good when it comes to raising money. The more options (and contacts) you have, the better off you’re going to be. Lastly, when you’re doing all that talking, be sure you don’t forget to take pauses and listen! (see #1).

5. Momentum Is Your Friend, If…

Don’t waste precious time hunting for cash if you’re not yet “investor ready.” Keep dialing in your business model and make that sucker bulletproof. As an entrepreneur, it’s important to stay focused, inspired, and moving forward with steady pace. If you know which direction you’re going, it’s okay to sprint. On the other hand, if you have no clue where you’re headed, slowdown hombre. Speed without direction is the fastest way to getting nowhere.

6. Start Smart Or End Stupid.

Take it from people who have “been there done that.” Be wise with your time in the early stages. If you’re not truly confident and frequently find yourself second-guessing your path, stop. “Green” entrepreneurs blast out their concept stage plans when they’re not even mature enough to be considered for funding (and then wonder why they hear crickets?). Instead of taking this route, go meet with experts that can help you tighten up your concept, train of thought, and give you an indication whether you even have a viable idea in the first place. You’ll be smarter for it, and a more prepared entrepreneur the second time around.

7. Heighten Your Bullshit Radar.

The early stage investment capital space is crawling with unsavory characters. Do all you can to avoid a lengthy unfruitful and expensive ride on the scam tram. We already mentioned in #2 above that you should seek out value. Well, in order to do so, you must first sharpen your perceptive skills. If someone says they “know how to find you capital” (and they haven’t shown you and credible evidence that they know how), ask them how they intend to do that. Remember during the last presidential race when John McCain proclaimed, “I know how to catch Bin Laden.” Hey, if he knows how to “do it” then why hasn’t he shared it with anyone already. It’s because it’s just desperate drivel from a man seeking votes from unperceptive swing voters.

8. Cash Is King.

Do your economic models scale beautifully? Do you have a solid way to make money? Can you prove it? If this part of your plan is not credible, you will quickly be voted off Start-up Island. No question about it. If an investor were hosting the show Survivor, they’d say, “Bring your business plan up here (after handing it to them, they toss it in the fire). The tribe has spoken. It’s time for you to go. The rest of you looking for funding, head back to camp and work on your financial models.”

9. Don’t Wait In Line.

beheardQuit trying to shout “me…me…me” in the crowded pitch farms. This is a complete waste of time, effort, and money. In order to break through with investors, you’ll have to take risks and do whatever it takes to get noticed. Don’t just show up on the congested scene with one arrow in your quiver. Arm yourself with third party due diligence, a working prototype, or some other vehicle that demonstrates that your business is worthy of attention and funding consideration.

10. Sell Something Dammit.

cashregisterIf you are starting a business, sell something. Nothing builds excitement, momentum, and revenue faster than actually ringing a real register. Far too many new ventures focus on research and development and by the time they have a product, the market has moved. They never got real consumer feedback and they wound up running out of money before they were able to hang that first dollar on the wall. If you want to succeed, make sure the “selling” component is a well-oiled machine. It’s the difference maker.

This is the conclusion section from our recent paper, Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

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chessclubpractice

There’s no question that success comes through hard work and persistence. If that’s the case, why does the media focus only on those stories of achievement? Flip through the pages of Inc and Entrepreneur, or watch Donny Deutsch on the Big Idea and you’d think wild and immediate success is the norm for an entrepreneur. Well, the fact is, the majority of new businesses fail, but the learnings from these failures can be invaluable if an entrepreneur uses the setback as a chance to dig in and come back stronger.

In order for innovation to take flight on a grand scale two things need to happen. First, we need to provide entrepreneurs with more honest and candid feedback on what it takes to succeed. Currently, it seems that most investors still aren’t willing to roll up their sleeves to help nurture and cultivate new entrepreneurial talent. Read any entrepreneur blog these days and you get the feeling that investors are out to make entrepreneurs feel unworthy of their money. While it’s not true, the best way to stunt innovation is to offer no constructive feedback at all (positive or negative).

The second necessary ingredient for innovation to expand is for entrepreneurs to make the personal investment it takes to be a success. In Malcolm Gladwell’s latest book Outliers, there is a chapter about what it takes to become a world-class talent. Gladwell quotes neurologist Daniel Levitin, “The emerging picture from such studies is that ten thousand hours of practice is required to achieve the level of mastery associated with being a world class expert – in everything. In study after study, of composers, basketball players, fiction writers, ice skaters, concert pianists, chess players, master criminals, and what have you, this number comes up again and again.”

Entrepreneurs pay attention; success in business or sports isn’t based on luck or talent, but hard work. When asked to sacrifice their time, salary, or personal savings to make a business fly, far too many entrepreneurs walk off the practice field, refuse to hire the high priced coach, or simply cut corners. The insight here is that there is no easy path to greatness; to make it you have to pay your dues and commit completely. Could you imagine an amateur athlete telling the New York Yankees that “after” they pay him millions of dollars, “then” he’ll go hire a batting coach and spend 10,000 hours to learn how to hit a 95 mph fast ball?

failletters“The odds aren’t that much different for start-ups. You are going to be embarrassed, ashamed, labeled as an idiot, shunned, ridiculed, and occasionally driven from the village with pitchforks. On average, YOU ARE GOING TO FAIL. MULTIPLE TIMES, in NEW & INTERESTING ways. GET USED TO IT. In fact, the more you are used to failing — and failing fast, with data on how you fail — the better off you will be.” start-up advisor Dave McClure.

Remember, most investors are completely buried in business plans and simply can’t dive deep into each one on a personal coaching level. So, just because an individual is not willing to fully commit to funding your venture does not mean your idea is a bad one. Perhaps it’s just not “investor ready” and what you really need is a nudge in the right direction. Even if it means no money (yet), an investor’s comments and suggestions may prove to be the pivotal moment in the path to success for a young company. Insight; don’t just make it your mission to get in front of people that will listen, but people that will also dole out generous portions of perspective.

Excerpt taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

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