9/30/2004

One Small Step for Entrepreneurs....

From The Entrepreneurial Mind:

"The Office of Advocacy of the SBA reports on another positive development in the fight to get government out of the way of entrepreneurs.

'Small businesses will find it easier to comply with complex and confusing federal regulations, if a bill recently introduced by Senator Olympia Snowe (R-ME) becomes law.

'The Small Business Compliance Assistance Enhancement Act of 2004 (S. 2834) amends the 1996 Small Business Regulatory Enforcement Fairness Act, a law that bolsters the Office of Advocacy's ability to reduce regulatory barriers that can stifle entrepreneurial growth. S. 2834 places new emphasis on compliance guides that agencies are required to write so that small businesses can better understand complex rules and regulations.'"

Trade Agreement Signed for Microbusinesses

From Law & Entrepreneurship News:

"Representatives from the US and Mexico signed a "mini-NAFTA" agreement on Monday designed to benefit microbusinesses - companies that employ five workers of less. Tuesday's issue of the Tuscon Citizen reports that the deal will reduce the barriers to trade for the smallest of businesses. The goal of the project is to establish a strong support system for companies of both countries. It will also aid in education of trade laws and usage of the internet to sell across borders. 52% of all US businesses are microbusiness. "

Tech Startups Face New Reality

The days when a young software hotshot could raise millions by talking to a gray haired millionaire she met in a coffee shop are over. Today, technology startups seeking venture capital investments encounter a financing landscape that presents a different, more discouraging picture.

For those early-stage entrepreneurs, however, with unique technology and a viable business model, venture capital funding is increasingly becoming available. The trick for the entrepreneur is to position the startup so that it is viewed favorably in today’s more risk averse, back-to-basics investing climate.

In today’s market, venture capitalists are often focused on later-stage companies, spin-offs, and public companies, which are often valued as low as any startup. VC's that invest in startups are demanding greater preferences for their investments. They are also negotiating lower company valuations, investing smaller amounts and linking additional funding to the achievement of financial or product development milestones.

Venture capital is returning to its roots. What was once old is now new again. Funding is being provided to startups with terrific growth prospects that utilize proprietary technology to solve a “point of pain” in an industry or organization. The paradigm is real companies with real business plans solving real problems.

In today’s climate, “bootstrapping” is often a necessity. Bootstrapping is a means of financing a small firm through the creative acquisition and use of resources without raising equity from traditional sources. Bootstrapping is characterized by reliance on personal savings; funds from friends, family and “angels”; internally generated retained earnings; credit cards; second mortgages, and customer advances, to name but a few sources.

Of course, some ideas require capital beyond the means of the founders of the business. Yet, for most startups, gone are the days where the “big idea” plan is presented to the venture fund, a large gob of money is obtained and then the work begins. Today, venture financing is more likely to go to companies that have spent their own time and money to develop a proprietary technology and that actually have paying customers, if not profits.

As to exit strategies, until a stronger IPO market emerges, venture capitalists are looking at mergers and acquisitions as their preferred liquidity events. To receive funding, technology entrepreneurs are well advised to plan to be acquired by a major player in the industry.

It is not enough, however, to simply talk about being acquired. The entrepreneur should envision the scenario in detail: How will it happen? Who are the likely acquirers? What kind of acquirer will it be? How will valuations be determined? What is the likely timetable? The business model an acquirer is most likely to find attractive in today’s market is one that has seen not only rapid growth but also profitability within three to five years.

Another key to success is adaptability. Business plans with built-in flexibility have the best chance for success. For example, if you are unable to raise the $1 million you are seeking from traditional venture capital sources, but can raise $300,000 by going to individual investors, consider adjusting your plan to make the smaller amount work.

And forget about pie-in-the-sky valuations. Living with reasonable initial valuations is essential for a start-up to receive venture funding. This means that entrepreneurs should be prepared to give up more of their ownership interests in order to obtain financing.

Finally, it pays to be in a “space” that is currently in favor. Hot areas for investment include computer and network security; wireless networking technology; internet infrastructure, certain biotechnology and healthcare sectors and business application software.

It is not enough, however, to be operating in a hot space. What is needed is a unique technology, a viable business model, a head start in the marketplace and a cost-effective solution that addresses a true “point of pain.” The paradigm is real companies with great prospects and real business plans solving real problems.

This is an updated version of an article originally published in the PIttsburgh Post Gazette

SBIR Grants Exclude VC-Backed Startups

This editorial from The Seattle Times calls for changes in the SBIR program stating:

"The Bush administration is interpreting a federal rule governing small-business innovation research grants in a way that hurts biotech and high-tech startups.

Directed by the White House, the Small Business Administration began in 2001 excluding such com-panies from receiving small-business grants if 49 percent or more of their funding came from venture capital. "

Via Moreover Technologies

Effective Compliance Programs under the Amended Sentencing Guidelines

This article from Mayer, Brown, Rowe & Maw LLP from Mondaq (free registration required) explains:

"Simply having a code of conduct is not enough for the purposes of the Sentencing Guidelines. A code of conduct is an integral part of an effective compliance and ethics program, but it is not the only part of one."

Congress Extends Tax Cuts; Adds New Tax Relief

From The SOHO Daily News:

"Congress has acted to extend the life of popular tax reductions that were due to expire at the end of this year, averting a tax 'increase' for virtually all taxpayers. The measure also gives a reprieve to expiring business and special-interest tax breaks, tidies up the tax code, and offers a further one-year 'fix' on the alternative minimum tax.
The Working Families Tax Relief Act of 2004 extends the life of four popular 'middle class' tax breaks. The child tax credit is extended at its current $1,000 per child level, the 10-percent income tax bracket will stay at its current level (adjusted for inflation) and two 'marriage tax penalty relief' measures will not decrease next year. "

Three Skills Leaders Use to Get the Job Done

This article by Charles Feld in CIO magazine offers insight into three tools leaders use to achieve their visions: (1) Partnerships Need Reinforcement, (2) Decisiveness Demands Confidence, and (3) To Get Focused, Get Together.

Via Brad Feld

Six Secrets of Highly Secure Organizations

This article from CIO Magazine offer these six suggestions gleaned from the survey responses of more than 8,000 CEOs, CFOs, CIOs, CSOs, vice presidents, and directors of IT and information security from 62 countries on six continents:

1. Spend more.
2. Separate information security from IT and then merge it with physical security.

Over the course of the next year:

3. Conduct a penetration test to patch up network and application security
4. Create a comprehensive risk assessment process to classify and prioritize threats and vulnerabilities.
5. Define your overall security architecture and plan from the previous three steps.
6. Establish a quarterly review process, using metrics (for example, employee compliance rates) to measure your security's effectiveness."

Recommended by DennisKennedy

Courts May Embargo Web Sites

This CSO Magazine article comments on the case of Cobell v. Norton,a class-action lawsuit that was filed June 10, 1996, in the U.S. District Court in Washington, D.C.,stating:

"The Cobell case is highly significant because it constitutes precedent for the idea that, even in the absence of proven intrusions or damages, courts can enter a protective order to secure a website until security can be established on the site. This gives privacy advocates a new and potentially potent tool against the argument that, even if personal information is compromised, a lack of evidence of loss precludes a finding of damages. In other words, 'no harm, no foul' may no longer be the rule. Cobell litigation also warns that, in the absence of a clear security standard for each industry, courts will likely establish their own security standards by using 20/20 hindsight."

9/29/2004

Partner to Maximize IP Profit

From I/P Updates:

According to an article in the September 27, 2004 The McKinsey Quarterly,"McKinsey research shows that in lots of cases, companies could earn 5 to 10 percent of their operating income from the sale or licensing of intellectual property, yet most earn less than one-tenth that. Too often, they don't know what they have, what it is worth, or what other industries could do with it. The solution is to build a network of outside specialists who can identify the best market for each asset and use their industry contacts and experience to negotiate a sale."

More from the McKinsey article:

"Most companies' attempts to make money out of their intellectual property suffer from the mistaken belief that it is an easy source of revenue. But capturing the full value of these assets requires systematic effort, a well-managed network of outside partners, and active senior-management support. "

Built to Flip: A New Road to Riches

This article from Business 2.0 examines the trend of an "emerging breed of here-today, bought-tomorrow startups that are sprouting with minimal funding, flowering briefly, and being gobbled up by far bigger companies. In many instances, these built-to-flip outfits forgo -- or sometimes can't get -- money from venture capitalists. They instead create shoestring operations focused on the rapid development of narrow technologies to plug gaps in existing product lines or add useful features to existing products. Then they look to a deep-pocketed patron to scoop them up. "

Via E M E R G I C . o r g

Biting the Hand

Quentin Johnson writing for Law & Entrepreneurship News offers a good summary of an article entitled “Hostile Environment” from the Daily Deal, in which securities litigator Kimberly Greer writes about a growing trend of entrepreneurs suing their VC investors claiming the VC’s are violating their fiduciary duties to the company.

The Entrepreneurial Mind: Write Your Own Plan

Dr. Jeffrey R. Cornwall includes the following in his advice to all aspiring entrepreneurs about business plans:

1. Business plans should be the last thing you do, not the first.
2. Figure out how much you need to make in income and look at all of the non-financial factors that are important in your life.
3. Research the market to make sure that there is really a market.
4. Examine what it will cost to provide the service or make the product.
5. Make sure you know what you're getting into.
6. Now it is time to write your plan, but first you need to figure out why you need a plan. A plan you write for yourself is very different from a plan you write for an investor. Know the audience of the plan. You probably will need to write a couple of different versions for different uses: one for you, one for your investors, and one for creditors. If the plan starts to break down financially or in your ability to make it happen, give it up and go on to your next idea.

How to Develop Software

This post by Barry Briggs offers many great tips for software developers. Included among them are these:

"1. Great software is built by small teams. If you're building a great BIG software product use lots of small teams. The team leaders should be able to carry on a civilized conversation with one another; conversely, they should not be trying to torpedo each others' careers behind their backs.

2. Great software projects always, always have one person who gets the big picture. He/she codes. Repeat: he/she codes. This person is called the architect.

3. Software "architects" that don't code are not software architects. Sorry."

9/28/2004

Selling Your Business

From the WSJ StartupJournal:

"Given the emotional trouble many entrepreneurs have selling or passing on their businesses, you would think they were giving away one of their own children.

In many cases, that is exactly how they feel about the entity they have helped nurture, cultivate and watch grow over the years. So when it is time for that baby, as well as the entrepreneur, to move on to the next phase of their respective lives, there are a variety of issues to iron out before even thinking about things like getting the best sale price or minimizing tax implications. "

Venture Capital Broken?

Gems from an article by Joel Spolsky

“There are certain fundamental assumptions about doing business in the VC world that make venture capital a bad fit with entrepreneurship...

The fundamental reason is that VCs do not have goals that are aligned with the goals of the company founders. This creates a built-in source of stress in the relationship.

Specifically, founders would prefer reasonable success with high probability, while VCs are looking for fantastic hit-it-out-of-the-ballpark success with low probability. A VC fund will invest in a lot of startups. They expect about seven of them to fail, two of them to trudge along, and one of them to be The Next Netscape ("TNN"). It's OK if seven fail, because the terms of the deal will be structured so that TNN makes them enough money to make up for all the losers...

The second part is the fact that VCs hear too many business plans, and they need to reject 999 out of 1000...When you have to say “no” 999 times for every time you say “yes,” your method becomes whack-a-mole. Find the flaw, say no. Find the flaw, say no. The faster you find flaws, the more business plans you can ding…

Here's another funny thing that's happening. VCs are reacting to the crash by demanding ever stricter conditions for investments…There are probably hundreds of software companies started every day. Of that universe, there is a small number that are actively looking for early stage investors. Of that small number, an even smaller portion is willing to go along with the current harsh deals that VCs are offering… ”

Via del.icio.us/dbayless

Open Bar Provides Open Source Legal Resources

From Denise Howell:

"Open Bar is a not-for-profit organization founded with the goals of (i) developing clear information about the legal rights and responsibilities of software developers, legal professionals and users of software in the emerging arena of open source/free software; and (ii) educating software developers, legal professionals and the general public about the issues, rights and responsibilities associated with the development, use and distribution of open source/free software.
[...]
The demand for education and leadership from the legal community is high and increasing daily, yet until now no legal, non-political group has stepped up to stem the tide of conflicting information and lack of clarity. Open Bar seeks to fill this gap, by (i) fostering development of objective means for evaluating the strength and enforceability of the various licenses and (ii) educating legal professionals and other members of the open source and free software communities on their related rights and responsibilities."

No King Makers in VC Business

Jeff Nolan offers good advice to entrepreneurs to pick their VC's wisely. Changing a few words from the article:

A productive and value-creating relationship is one where the players get along well together and respect each others contributions, the leadership team is strengthened with a good backstop provided by the board, and ultimately that the company performs to expectations because all of the parts mesh well together and deliver the right product to the right market at the right unit economics.

As investors and management, it is prudent to consider all the things that can go wrong and then assess each investors ability to manage through those obstacles, before committing to a particular VC. If the VC can't be a team player, it's not likely they will create significant value.

"There are no king makers in this business, building a successful company takes some luck, but a lot more hard work from everyone, including the board of directors. "

9/27/2004

Pa. Angel Network Launches Web-Site

The Pittsburgh Business Times reports:

"A statewide network of private investors has launched a new Web site to increase investment opportunities for both entrepreneurs and high net worth individual investors. The Pennsylvania Angel Network, previously a loose organization of private investors that has become more formalized in the past year, began to publicize its Web site earlier this month.

The site is aimed at current and potential PAN members, as well as business owners searching for funding, according to its director Jan Rumberger.

The network hopes the Web site, which can be found at www.paangelnetwork.com will help link new businesses with angels -- investors who put money into companies after they've formed, but before they are big enough to receive formal venture capital funding."

Does Your Startup Have "it"?

This post from Digitalyst offers these clues as to whether your startup is on the road to success:

You have customers (or sure prospects), investor interest, distribution deals (or real indications of interest from established distribution channels), advantageous supply arrangements, product champions in your customers’ organizations, favorable press coverage, favorable opinions from consultants and analysts, talent recruitment success, including the ability to recruit of topnotch VP of Sales.

What not to say in Business Plan

In this article from Angel Investor News.com Barry J. Moltz offers this advice on how to write a business plan:

“Write the plan in plain and proper English. Please understand that the reader comes to the plan with no knowledge of your business. No fancy words, clich├ęs or graphs will make them want to invest. Understand every part of your plan and be able to defend it. Use your own passion to describe your plan. Make your plan your own.”

Moltz also urges avoidance of the following mistakes:

Excessive jargon and terminology such as disintermediation, sweet spot, best of breed, and win-win; introductory sentences stretching for an entire paragraph; using business plan template software or working from an existing plan; and including any of the following phrases:

"Our numbers are conservative."

“We’ll give you a 100 percent internal rate of return on your money."

"We project a 10 percent margin."

"We only need a 5 percent market share to make our conservative projections."

"Customers really need our product."

"We have no competition."

Via entreprenuerslife.com

Meeting the China IP Challenge

A new report by The Boston Consulting Group identifies what companies must do to avoid major risks to their global businesses from China IP issues stating:

"Global companies recognize China as a critical opportunity-but also as a source of enormous challenge and potential risk to their intellectual property (IP) assets. But the issues surrounding intellectual property (IP) need not be a showstopper for companies interested in the opportunities that China offers."

The report is available here in PDF format.

Via Yahoo Prnews

Trademark Law in a Nutshell

From Guiding Rights Blog:

"In our trademark course, we struggle to cut to the core of trademark law, to find the essence, to reveal the fundamental principles on which all rests.

We come down to these two statements:

Rights = use + distinctiveness

Infringement = prior rights + likelihood of confusion


That is all you need to know. Everything else is a footnote."

Managing the Board of Directors

This post from Calblog via Carnival of the Capitalists offers practical advice for dealing with the board in the post-Enron era.

Other posts of mine on this topic may be found here and here.

Carnival of the Capitalists

Visit the latest Carnival of the Capitalists at Crossroads Dispatches for an interesting collection of business related articles and posts.

9/26/2004

Safeguarding Trade Secrets in the Information Age

This article from Findlaw offers an overview of workplace privacy issues as well as steps that employers may take to protect their trade secrets, stating:

"Although there are no guarantees that trade secrets won't be revealed, there are steps the employer can take to make it less likely to happen. Monitoring the equipment and having communications policies in place will put employees on notice that the employer is serious about protecting its proprietary information. Additionally, these policies will help to position the employer to vindicate its rights in the event of unauthorized disclosure."

What's in a "non" Agreement?

In this article, originally published in the Pittsburgh Technology Council's, TEQ Magazine, I explain some of the legal considerations involved in signing employment contracts, nondisclosure, noncompetition and other "non" agreements.

1. What are "non” agreements?

Executives, IT professionals, consultants and others are frequently asked to sign non-disclosure, non-compete, non-raiding and non-solicitation agreements. These “non” agreements contain provisions called “restrictive covenants” that impose obligations on employees that may survive the employment relationship. “Non” agreements help an employer to keep trade secrets and other confidential information out of the hands of competitors.

The typical non-disclosure agreement restricts the use and disclosure of items such as customer lists, software, formulas, cost and pricing data and similar information. The other “non” agreements may require the employee, during employment and for a set period thereafter, not to compete with the employer, not to solicit the employer’s customers nor hire its employees away from their current positions.


2. What is an Assignment of Inventions Agreement?

In the technology arena, particularly where a company may contemplate going public, it is essential to have clear documentation regarding the ownership of software and other intellectual property. Accordingly, when an employee or consultant develops software or creates other work product that can be protected by copyright or patent law, the employer may require that the developer sign an assignment agreement that confirms that the employer and not the developer owns the work product. This is because the general rule in this area is that the person who creates the work owns it, unless, in the case of employees, it is clear that an employee was hired specifically to create the work.

3. What is an employment contract?

In most states, including Pennsylvania, employment is “at will.” In the absence of a contract, either the employee or the employer may terminate the relationship at any time, with or without cause, as long as the reason for termination is not illegal under a federal of state statute. Because employment terminations frequently bring lawsuits, employers may require employees to sign an offer letter or a more formal employment contract that clearly sets forth the terms and conditions of employment, such as duties, salaries, bonuses, fringe benefits and length of employment.

If separate “non” agreements are not used, the employment agreement may contain similar restrictive covenants and spell out the ownership rights of the parties to the employee’s work product. The employment contract may confirm that employment is “at will” or may contain provisions that require the employer to have good cause to fire an employee. The agreement may also call for severance payments to be made to the employee after contract termination. Usually, severance payments are tied to the employee’s continued compliance with any applicable restrictive covenants.

4. What is a Stock Option Agreement?

A stock option entitles its holder to purchase a number of shares of a company’s stock for a set period of time at a certain price, called the exercise price. Options are ordinarily subject to a vesting schedule that requires a minimum period of employment before the option may be exercised.

Options are usually evidenced by a written stock option agreement that is signed by the company and the option holder. The agreement sets forth the number of shares that may be purchased, the exercise price, vesting schedule and other essential terms. Frequently, the agreement will provide for acceleration of the vesting schedule or termination of the option in the event of a merger or upon employment termination. Employers also use option agreements to sign employees up to “non” agreements and to confirm the ownership of intellectual property.

5. What happens if I leave my current employer?

Planning is the key to successfully switching jobs, starting your own company or changing careers. Careful review is required of any agreements that you have signed. In consultation with legal counsel, you should determine your rights under the agreements, for example, with respect to any options. You also need to determine whether you are bound by restrictive covenants that could hinder you from pursuing your goals. Ideally, at the time of your hiring, you would have been aware of the possibility of future career shifts and in a position to negotiate favorable terms in the agreements that you signed.

Special care is required if you plan to engage in activities in competition with your former employer. Although non-compete covenants are legally enforceable, a number of factors will influence a court in deciding the extent to which a particular covenant will be enforced. If a covenant is not reasonable in scope or duration or imposes an undue burden on your ability to make a living, you may have more flexibility to pursue your objectives than it would at first appear.

Non-disclosure, non-solicitation and assignment of invention obligations are more readily enforced. In addition, regardless of whether you have signed any agreements, you may have a continuing duty to maintain the confidence of a former employer’s trade secrets and to refrain from interfering with your former employer’s business. It is therefore always best not to solicit customers of your current employer while you are still employed. Most importantly, It is imperative that you not take with you, transmit or disclose any trade secrets or other confidential information that belongs to your employer.

Sole Proprietorship Basics

This article from Nolo explains the basics for the simplest legal structure for operating a business, the one person owned, sole proprietorship stating:

"Sole proprietorships are so easy to set up and maintain that you may already own one without knowing it. For instance, if you are a freelance photographer or writer, a craftsperson who takes jobs on a contract basis, a salesperson who receives only commissions, or an independent contractor who isn't on an employer's regular payroll, you are automatically a sole proprietor."

Via DoctorVAR.com

Four Ways to Pick a Winning Product

From E M E R G I C . o r g

"HBS Working Knowledge has an article by Eric Mankin on the "four benchmarks for predicting the success of your product or service:

A new product or service will be successful if it does a better job than existing products at satisfying the needs of a targeted customer group. But "doing a better job" actually has four dimensions. If a new product or service can exceed existing offerings across all four of these dimensions at once, then we can guarantee that the targeted customer group will purchase it.

The four dimensions fall into two categories, purchase motivators and purchase barriers. The new product has to excel at:

1. Providing high purchase motivators
A. It must be less expensive than existing products (lower price).
B. It must provide better features than existing products (greater benefits).

2. Eliminating purchase barriers
A. It must not have any switching or adoption costs (easy to use).
B. It must be readily available (easy to buy).

Customers for whom all four conditions apply will purchase the product or service because there are only benefits and no barriers. The closer any new product comes to succeeding in all four dimensions, the greater the chance that the product will be a winner. And, of course, the innovation will be a financial success if these conditions can be met at a profit."

9/24/2004

Friday Go Lightly

"Has everyone in America ever agreed about anything? Yes, and his name was Frank Fontaine." So states Larry Miller in this article about the old Jackie Gleason show titled "Hiya, Mr. Dunnaghy." Miller recalls the weekly barroom sketch in which Gleason would play the gregarious bartender:

"Then the best part. Gleason would pause and say, "What's that, Mr. Dunnaghy? Oh, he's in the back, I'll call him out. Hey, Craz'!" And the applause would start again, even bigger.

"Craz'" was a hugely popular character named "Crazy Guggenheim," played by Frank Fontaine, and he was, well, crazy. In fact, he might have been a drunk, too. Remember, I'm talking about the character, not the man.

The joke of "Crazy Guggenheim" was that for one reason or another he was impaired, maybe even mentally disabled, or as the blunter times used to say, retarded. Would that be funny today? I don't know. Dudley Moore was fabulous in Arthur, but "Crazy" wasn't rich, in fact just the opposite, he was a mass of rags.

He was funny. Oh, he was funny. "Crazy" would shamble out and stumble over, and in the sweetest, happiest way, say, "Oh, hiya, Joe. Hiya, Mr. Dunnaghy-hee-hee-hee-hee." The same every week, like everything else, and the same reactions: howls; applause.

But that's still not the part I'm talking about. Joe and Crazy would go into a few jokes in the timeless, vaudevillian structure (used so well by Burns and Allen, among others) where one partner tries to get a logical response from the other, who is sweet and willing, but not that bright. (Another running gag with Crazy was when Joe asked him about his friend, "Flootchey Tooley." "Flootchey Tooley?!" Crazy would repeat exuberantly, and spit in Joe's eye doing it. Gleason would wipe the eye theatrically--never angrily, by the way--and the bit would continue.)

That was the point in the sketch where Joe would say, "Hey, Craz', how about a song? Put a dime in number fifteen, huh?" "Okay, Joe," Crazy would agree, but the applause that was already rising blocked it out. Crazy would waddle over to the juke box, still demented, push a button, and return to the bar.

But as the music swelled, the most extraordinary transformation took place. He'd take his worn hat off, the brim turned up in front (like Carney's, come to think of it), place it gently on the bar, and his face would change completely. A new soul would fill him, and he became a different person; himself, as it turns out. For every week on The Jackie Gleason Show, at the same moment, in the same sketch, when Frank Fontaine came out of character and opened his mouth, you knew he was about to sing the most beautiful song you'd ever heard."

Read the rest of article here

9/23/2004

First Find Angels

This advice comes from Paul Allen: Internet Entrepreneur:

"My advice to first-time entrepreneurs: find angel investors to back you. It's easier, it's faster, you'll get a better valuation, and more help from your investors.

Start with an 'advisory board' of 6-8 seasoned business people who are well connected and willing to help you find investors and build your company. Give them some equity in return for their help. (I think 1% equity for 2-3 years of assistance is good for an early stage company). Some of them may end up investing in your company; others will open doors for you that lead to capital.

Later on you can graduate to venture capital, but only after you have a track record and a team and a clear exit strategy that can be accelerated by the largest investments VCs make."

Seven Do's and Seven Don'ts for CIO's

This article from TechRepublic highlights this list of "Don'ts" as the "The seven habits of wildly unsuccessful CIOs"

1. Acquire technology simply because it's new
2. Exhibit a knee-jerk reaction against open source
3. Create solutions in search of a problem
4. Eagerly reach beyond competency level
5. Act as CMOs—Chief Marketing Officers
6. Fail to understand relationship between technology and business
7. Don't communicate well with nontechs

While this white paper from Cisco offers these "Seven Leadership Strategies for IT Success":

1. Align IT to business strategy
2. Make IT governance a priority
3. Use metrics but don�t let them dictate strategy
4. Commit to a unified information architecture
5. Create a shared CEO and CIO vision
6. Develop CIO skills beyond technology
7. Know when and how to partner

Start Ups Have New Cost Advantages

This post from TJ's Weblog points to a post by Joe Kraus that highlights the cost differences that make it much easier to start a business on much less capital today than, say, ten years ago.

The advantages cited by Joe are as follows:

1. The tools to develop software cost nothing now.
2. Hardware costs are approaching 0.
3. Start-ups have access to global labor.

To which TJ adds:

4. Marketing works different nowadays - blogs are an ever increasing marketing power and (smaller) cost factor
5. Enterprise Software Sales have gone ASP - there are many ways to reach customer besides the old-fashioned sales pitch (for some products at least)
6. Communication Costs appraoch 0 with Skype and Skypeout
7. Offices lose their value - small businesses are often virtual

Ten Start Up Business Success Factors

This post from Small Business Trends
offers these ten factors for new technology business success from Dr. Scott Shane, professor of economics at Case Western Reserve University:

1. Select the right industry
2. Identify valuable business opportunities
3. Manage technological transitions
4. Identify and satisfying real market needs
5. Understand customer adoption
6. Exploit established company weaknesses
7. Manage intellectual property
8. Create barriers to imitation
9. Choose the right organizational form
10. Manage risk and uncertainty

9/22/2004

Low-Cost Startup Secrets

This article from Entrepreneur.com offers these tips for starting a business on a shoestring:

Get free advice from a successful mentor who's already been through the rough-and-tumble first stages of starting a business.

Have your business plan drawn up for free by submitting your business to an MBA class.

Barter strengths with other business owners.

Get low- or no-cost advice from a university-affiliated Small Business Development Center (SBDC).

Hire a virtual secretary.

Hire college interns to help with the small tasks.

Enlist the help of your support network.

("Those who believe in you will want to see you succeed, so determine their strengths, get them excited about your vision and ask them to help you out.")

Business Website IP Basics

This article from WIPO explains:

"A company's website can be a great tool for promoting business online and for generating sales. However, as Web commerce increases, so does the risk that others may copy the look and feel of your website, some of its features or the content on your website. The risk also increases that you may be accused of unauthorized use of other people's intellectual assets. This article deals with some of the basic issues that you should be aware of before launching a website."

Covered are questions such as:

What elements of your website can be protected?
How to protect your website
Who owns the IP rights in your website?
If you pay a person to develop your website, who owns the copyright?
What topics should be included in a web development agreement?
Can you use material owned by others on your website?
What to keep in mind when creating, launching, maintaining or developing a website.

Wealth of Small Biz IP info at WIPO

The Small and Medium Enterprises homepage of the website of WIPO - the World Intellectual Property Organization contains a wealth of information on intellectual property that is useful to small businesses.

This page contains links as follows:

"Intellectual Property for Business

To many, intellectual property (IP) is a rather obscure legal concept that can only be properly understood and applied by those who are specially trained. You may be asking yourself why any small and medium-sized enterprise (SME) and, more so, your SME should pay attention to IP, or what benefits your SME could possibly draw from its use. The following links may provide answers to some of these questions. "


Why is Intellectual Property Relevant to Your SME?
How can Intellectual Property Enhance the Market Value of Your SME?
How do you Turn Inventions Into Profit-making Assets of Your SME?
Why is Intellectual Property Crucial for Marketing the Products and Services of Your SME?
Can Your SME use Intellectual Property Assets for Financing?
How can Intellectual Property Enhance the Export Opportunities of Your SME?
How can Your SME Acquire and Maintain Intellectual Property Protection?
Protecting the Intellectual Property Rights of Your SME Abroad
Why are Trademarks Relevant to the Success of Your SME?
Protecting the Trade Secrets of Your SME
How can Your SME Benefit From Copyright Protection?
How can collective marks, certification marks and geographical indications be useful for SMEs?
Protecting Innovations by Utility Models
Managing the Intellectual Property Assets of Your SME
Using Patent Information for the Benefit of Your SME
Licensing of Intellectual Property; a Vital Component of the Business Strategy of Your SME
What Should Your SME do to Resolve Disputes Related to Intellectual Property?

(The entire content of the "Intellectual Property for Business" section is also available in MS-Word 97 and Adobe PDF formats.)

Health Savings Accounts Useful to Small Businesses

"A LITTLE-NOTICED provision in the Medicare prescription drug law passed by Congress late last year is starting to shake up the group insurance market for small businesses.

The provision created health savings accounts that allow people to set aside pretax income to pay medical bills. When linked to high-deductible insurance policies, the accounts, known as H.S.A.'s, can drastically lower an employer's costs of providing employee health benefits. This may allow more small businesses to offer such benefits — or provide savings for those that already do."

So states this article from The New York Times found via Benefitsblog

Tips for Starting a Small Software Company

Thomas Warfield offers these tips for starting a small company:

"Don't start too big
Don't quit your day job yet
Don't fake the plural
Don't forget the Law of Focus
Don't spend much on advertising
Don't hassle your users"

Via BusinessPundit

Organizations Feel Growing Pains

"As organizations enlarge, they often experience a variety of growing pains that signal that something has gone wrong in the process of organizational development. The ten most common organizational growing pains are listed here:

1. People feel that 'there are not enough hours in the day.'
2. People spend too much time 'putting out fires.'
3. People are not aware of what other people are doing.
4. People lack understanding about where the firm is headed.
5. There are too few good managers.
6. People feel that 'I have to do it myself if I want to get it done correctly.'
7. Most people feel that meetings are a waste of time.
8. When plans are made, there is little follow-up, so things just don't get done.
9. Some people feel insecure about their place in the firm.
10. The firm continues to grow in sales but not in profits."

Each of these growing pains is described in this article from About.com

Blawger Bowl Update Week #2

This hilarious post from unbillable hours summarizes the week 2 fantasy football action in our Blawger Bowl. Yours truly won (the booby prize) for worst performance of the week. Oh well.

9/21/2004

Carnival of the Capitalists

The weekly posting of articles on business, finance and related topics that is the Carnival of the Capitalists is up at voluntaryXchange

9/20/2004

Private Equity Glossary

Everything you always wanted to know about definitions related to private equity investing from "A Round" to "Zombie" may be found in this Glossary from the Center for Private Equity and Entrepreneurship of the Tuck School of Business at Dartmouth University.

The Urge to Merge in Pharma

This article from the-scientist.com reports:

"With pharma companies' pipelines relatively weak and many patents set to expire, 2004 is shaping up to be a strong year for mergers and acquisitions as firms look for a way to get quick access to products under development."

Three New Programs to Aid Exports to China

This post by Douglas Jacobson explains:

"The U.S. Department of Commerce (DOC) has unveiled three initiatives, the China Business Information Center, American Trade Centers and the Global Supply Chain Initiative, intended to assist U.S. companies interested in exporting to China.

The China Business Information Center (BIC) offers U.S. companies access to counseling with trade specialists in the United States, referrals to U.S. Commercial Service officers in China, and helps channel trade leads to clients through U.S. Export Assistance Centers. The BIC consists of a toll free telephone number that the public can use to speak with a China specialist, a Web site with China-focused information and export tools, and a series of outreach events planned throughout the United States.

The BIC's Web site at www.export.gov/china features a variety of information that U.S. exporters can use to undertake the following activities:

Promoting products and services to qualified Chinese buyers, distributors and agents;
Understanding Chinese laws, regulations and customs;
Collecting market research;
Developing new or additional business relationships in China;
Initiating the basic steps to enter the Chinese market; and
Resolving trade disputes."

Keys to a Winning Product

This article from HBS Working Knowledge suggests that the success of new product introductions may be predicted by determing where the product falls in a quadrant with four dimensions:

"The four dimensions fall into two categories, purchase motivators and purchase barriers. The new product has to excel at:

Providing high purchase motivators
A. It must be less expensive than existing products (lower price).
B. It must provide better features than existing products (greater benefits).


Eliminating purchase barriers
A. It must not have any switching or adoption costs (easy to use).
B. It must be readily available (easy to buy).

Customers for whom all four conditions apply will purchase the product or service because there are only benefits and no barriers. The closer any new product comes to succeeding in all four dimensions, the greater the chance that the product will be a winner. And, of course, the innovation will be a financial success if these conditions can be met at a profit."

Keys to Brandname Success.

This post from Laura Ries offers nine keys to creating powerful brand names, stating:

"The single most important marketing decision a company can make it what to name a brand. A brand’s power lies in its ability to grab a position in the mind of the consumer. With a poor brand name you make the job of getting into the mind that much harder. With a great brand name you can help your brand down the road to success...

Some powerful brand names include: Lexus, Red Bull, Google and Starbucks. The 9 keys that follow will help you pick the best name possible for your brand. Don’t expect a name to meet all the nine requirements but if it covers more than a few you’ll know you have a winner."

She suggests that powerful brand names are:

Key #1: Short
Key #2: Simple
Key #3: Suggestive of the category
Key #4: Unique
Key #5: Alliterative
Key #6: Speakable
Key #7: Spellable
Key #8: Shocking
Key #9: Personalized

[Via E M E R G I C . o r g via Marketing Playbook]

9/19/2004

Working With Contractors Made Easy

This excellent and comprehensive article by Dave Hecker from SitePoint.com explains:

"One of the most challenging parts of growing an Internet business is the location, qualification, and engagement of contractors. Although contractors offer major advantages over full-time employees, finding them is at best a costly and time-consuming process...

In this article, we'll look at some of the core concepts that will allow you to get the most out of your contractors while fostering the long-term relationships that will put your business in a strong position from which to grow."

The article is broken into six parts and is well worth reading in full:

Part 1. Finding Candidates
Part 2. Qualification and Trial
Part 3. Managing Contractors
Part 4. Money and Payments
Part 5. Legal Agreements
Part 6. Working with Offshore Contractors

Avoiding Sarbanes-Oxley Pitfalls

The basics of Sarbanes-Oxley compliance are covered in this article by Theodore F. di Stefano for E-Commerce Times:

"Management must establish a code of conduct and ethical behavior that absolutely permeates the entire organization. Management must consistently set and live that code. There is nothing as demoralizing as having to comply with rules that are roundly ignored by those establishing the rules...

The overriding principle is that each and every item in your financial statements has to arise from a transaction that will stand the utmost scrutiny -- that means no conflicts of interest, no booking of income on a promise and recording all items of income and expense in the period earned or incurred."

US H-1B Visa Cap Near

From a bulletin from the LeClair Ryan Law Firm via a post on PHOSITA:

"The H-1B U.S. visa is one of the cornerstones of the US scientific and research community. The H-1B visa is a nonimmigrant classification used by an alien (i.e. non U.S. citizen) who will be employed temporarily in a specialty occupation or as a fashion model of distinguished merit and ability. Congress has tightened up the number of H-1B visas that are to be issued in the coming years and it appears that the opportunity for the 2004-05 fiscal year may be drawing to a close."

Older Workers Heed Entrepreneurial Spirit

This article from the Houston Chronicle notes that men and women over fifty years of age are increasingly embracing the entrepreneurial spirit and starting businesses, particularly when they become the victims of "downsizing" or "rightsizing" or the latest variation thereof.

Businesses Without Boundaries

From a thought provoking article on EContentMag.com:

"The ability of wireless networks to reach virtually any point on the planet makes mobile communications one of the most important and challenging frontiers for the enterprise. To be successful, organizations must absorb mobility into their way of doing business and shift from a culture in which technology is merely present to one in which technology is an integral part of key business processes. This fundamental transformation demands new methods and a new mindset...

For the notion of a business without boundaries to prevail, backend applications, data, and content must be re-engineered to take complete advantage of the features mobility offers...

'You need to ask: What is the information we have within the corporate enterprise that—if we could distribute it—would add value to our business?' Put simply, the organization should identify the key content that could allow it to do more business, close more deals, and be more interactive with customers. 'Then it must develop a strategy to deliver it in real-time to the users who need it most.' These mobile users include field service and sales employees who demand fully portable, real-time access to the same information resources and tools that, until recently, were accessible only from the desktop."

9/17/2004

TGIF Fun Stuff

Moove on over to the The Ultimate Build Your Own Cow Page! which as Denise Howell points out, needs no further explanation.

Then check out Fun Invention Facts from Inventor's Digest. An example:

"Did You Know that Robert Adler has the dubious distinction of being the Father of the Couch Potato? Back in 1955 Adler was employed by what was then Zenith Radio Corp., where he was charged to invent something that would allow viewers to turn down the TV volume without leaving their chairs. After a series of flops (such as a wired contraption that people tripped over), Adler hit on the idea of using sound waves. Thus the Remote Control was born . . . and some viewers haven't moved since!"

And don't forget that Sunday, September 19 is Talk Like A Pirate Day

Ahoy Mateys and Avast You Land Lubbers and Have a great weekend.

9/16/2004

Rule #1 - Fill an Unmet Need

This post from Dave Pollard elaborates on the following theme:

"Entrepreneur Magazine lists 'find a need and fill it' as Rule #1 for business start-ups. Chuck Frey's 'Innovation Tools' says these six words lie at the root of any business success. It's the most important business advice you can give.

But what does this mean? It means that every successful enterprise's offerings (products and/or services) meet four criteria:

They fill an unmet business, social or consumer need.

The enterprise understood why the need wasn't already being met, and overcame those obstacles.

The enterprise has the competencies to effectively create and deliver offerings that fill that need.

The enterprise has the resources to bring those offerings to the marketplace.

This may sound like a simple recipe, but it's actually quite difficult to achieve. "

Return of the Dual Track IPO

This article by Kilpatrick Stockton from Mondaq (free subscription required) explains that a boom time financing technique is back, but with a twist:

"Like many techniques developed in the boom market conditions, dual track IPOs are making a comeback in a new guise in the slowly recovering but still turbulent equity markets.

Dual track means pursuing a stock market flotation (IPO) and a trade sale simultaneously, with an underlying intention of creating competition and price tension between stock market investors and trade buyers...

The mechanism of dual track IPOs remains largely the same, but the objective is different: rather than enhancing the price, the aim is now to secure a sale."

Once Stop Federal R&D Search

From EContentMag.com:

"In collaboration with six other Federal agencies, the Department of Energy Office of Scientific and Technical Information (OSTI) has announced an effort to make Federal research information available on the Web. Using www.osti.gov/fedrnd/, citizens can now search at one Web portal across more than half-a-million summaries of R&D projects from seven Federal resources."

Robots & Thought Extravaganza




Carnegie Mellon University will celebrate the 25th anniversary of its world-famous Robotics Institute with an exciting, thought-provoking, robotics extravaganza that will take place October 11 - 14, 2004. The four-day, public, interactive event will provide a forum for the research, educational and business communities to explore and discuss the impact and future of robotics.

SOX and the Private Company

This article by McMillan Binch on Mondaq (free subscription required) explains that private companies have good reasons to adopt corporate governance changes in the wake of the public company changes engendered by the Sarbanes-Oxley Act (SOX) stating:

"Increased accountability and transparency of internal controls and accounting processes can be a significant benefit to many organizations. Other private companies may be pressured to comply, to varying degrees, with SOX...by third parties including shareholders, private equity investors, lenders, directors' and officers' liability insurers and government regulators. Concern over directors� liability and fiduciary obligations also may motivate board members to push for improved corporate governance...

Voluntary steps that can be taken by private companies to improve governance include electing independent board members, adopting a formal code of business conduct and ethics, establishing an internal audit function, requiring certification of financial information and limiting services provided by their accounting firm/auditors."

Apparently, this message is getting through according to a recent study reported on by Foley & Lardner from the same source, stating:

"More than three-quarters (77%) of the private organizations responding to the study indicated that the Sarbanes-Oxley Act or other corporate governance reform requirements have impacted their organizations. While a majority of these private organizations said that the governance standards were self-imposed, other common factors influencing the decision to adopt these standards included pressure from board members or auditors.

Many private organizations planned to adopt or have already adopted several measures in response to the Sarbanes-Oxley Act:

CEO/CFO financial statement attestation (44%)
Establishment of whistle-blower procedures (40%)
Board approval of non-audit services by auditors (43%)
Adoption of corporate governance policy guidelines (40%)"

9/15/2004

10 Avoidable Small Business Mistakes

This article from BusinessKnowledgeSource nominates these as the most common reasons for small business failures:

1. Undercharging
2. Concentrating Exclusively on Sales
3. Extending Credit Too Easily
4. Not thinking about taxes until after the tax year is over
5. Not having a plan of attack
6. Not hiring and keeping good employees
7. Not providing outstanding customer service
8. Overdependence economically on a small group of customers
9. Allowing emotions to interfere with sound business decisions
10. Failing to develop as leaders and managers

Why Acquisition Growth Strategies Fail

This article from Fleet Capital explains that when done well, growth-through-acquistion strategies can make a great deal of sense. Done poorly, such acquisitions can halt a company in its tracks and spell disaster for shareholders.

While there is no single formula for success, the article points out the utility of avoiding these four common pitfalls:

1) Lack Of True Integration
2) Bad Fit
3) Poorly Structured Transactions
4) Culture Clash

Via Term Sheet

Project Plans Can Become a Problem

This article from Computerworld explains:

"While a good plan is critical for successful delivery of a project, following a plan too blindly in the face of the inevitable changes that projects face can be a recipe for failure. The best project managers know that successfully taking a project from concept to completion requires not only a plan, but the willingness to deviate from that plan when conditions change and adaptation is necessary. "

Run an Efficient Board Meeting

This post from Ed Sim via TJ's Weblog offers good advice for planning and running board meetings that maximize shareholder value rather than becoming gigantic wastes of time.

He advises:

1. Be well prepared
2. Schedule meetings on a 4-6 week timetable
3. Focus on discussion rather than presentations

He suggests the following standard framework for the meeting and discussion

1. Company Summary by CEO
2. Sales Review
3. Marketing
4. R&D
5. Customer support
6. Finance -- -Plan vs. budget - income statement, balance sheet, cash flow statement

Change Management In Need of Changes

This article from Tech Republic explains:

"In a change management methodology some entity, usually a change committee or change manager, gathers ideas for changes from various parties. These changes pass through an approval process. Accepted ideas then find their way to the appropriate parties for implementation. Rejected ideas fall into a big bucket somewhere, only to recur in an altered form sometime later. All changes, accepted or rejected, create a paper trail an auditor or manager can follow later to 'prove' an idea received its due attention. In a healthy system the accepted change log becomes a record of the change controlled system's evolution, in theory allowing a responsible party to assess the 'as it exists' system state.

This all looks great on paper. In practice, the change management system often comes into play at the tail end of the change cycle as a kind of 'rubber stamp' for decisions made by whomever holds the power to enact change within a particular area."

Online Extortion Suprisingly Common

"It's the kind of E-mail that grabs you by the collar and doesn't let go. On a Saturday afternoon last January, a message hit the in-box of BetCBSports.com, threatening to knock the online gambling site offline in prime sports-betting season if the company didn't pay up.

'You have 3 choices. You can make a deal with us now before the attacks start. You can make a deal with us when you are under attack. You can ignore us and plan on losing your Internet business,' the E-mail read.

It was no bluff. Within three hours, the site was taken down by what's known as a distributed denial-of-service attack. The first attack lasted five minutes...

Such threats happen more often than most people realize."

Read the rest of this article from Information Week here.


Fantasy Sports at the Crossroad

This post from EMERGIC.org points to a WSJ article stating:

"The fantasy-sports league phenomenon lies at the crossroads of sports, technology and media.

Fantasy leagues have been around for decades, but they were largely a cottage industry in the early years because compiling the statistics required poring over box scores of games for hours each week. Then, the Internet made it easy for online services to keep the statistics centrally and update scores automatically. A companion corps of commentators and data providers has arisen to peddle information and analysis.

Now, there are fantasy leagues for stock-car racing, cricket, pro cycling, and even bass fishing. But football, the most popular U.S. spectator sport, boasts the biggest fantasy following, in part because its relatively short season and one-game-per-week schedule make it easier for players to follow. Over 90% of all fantasy sports players participate in football, compared to just over 60% for baseball, according to the Fantasy Sports Trade Association."

Blawger Bowl -- That Inaugural Season

Week One Highlights
(Blawger Fantasy Football)

Bizz Bang Buzz 97
actualmalice 82

The Bees were buzzin' with Green, groan; Alexander, awesome and Jacksonsville, jagged

Go Ask Malice, this team performed with Brooks, broken; Mason, jarred; Davis, dominating, Duckett, ducking and Miami beached

Tech Law Advisor 59
Invent Blog 95

Advice to Advisor, check your team, perhaps, at the door, with Favre, fading; Harrison, harrowing; Lewis, lost; and Horn, no plenty

Inventing victory is this squad with Vick, vexing; Moss, the most; Bruce, brilliant; Barber, beautiful and Gates, going great guns

Promote the Progress 83
The Importance of... 91

Promoting the closest match of the week with Garcia, gonzo; Tomlinson, terrific; Davis, dreary; and Dunn, doing it

The importance of winning is not lost on this franchise with Portis, producing; Holt, halting, Shockey, shocking and Tennesse, terrific

ErnieAttorney 90
Libertarians 125

Earnestly hoping for a better matchup next week, this squad scores big but in vain, with Pennington, plugged in; Moulds, making it happen; and Jones, jumpin’

Give me Libertarians, or give me a great score for the week with Brady, bodacious; Holmes, hot, hot, hot; Westbrook, breezing; Crumpler, cruising and Rudy, rolling

Loosely Coupled 65
UnbillableHours 99

Loosey goosey was this franchise with McNair, McNot; Rogers, collared (as in “ouch”); James, judicious; and Graham, all he’s cracked up to be

Unbilled but thrilled with this team’s performance with McNabb, McMarvellous to Owens, McDangerous, despite Toomer, tumbling and Rice, rumbling

Patently Obvious 130
CRC's Inducers 93

It is patently obvious this team has potential with Culpepper, cruising; Green, careening into the end zone; and Martin, marching

CRC induced an unlucky matchup, with Manning, magnificent; Griffin, grinding out the yardage; McMichael, motoring and Deuce, yet to produce




9/14/2004

Intellectual Property Law Primer

Another topic of discussion at the GATE program class on entrepreneurship that I taught this morning at Duquesne University was intellectual property law protection.

On this topic, several excellent articles are available as primers that explain the basics of the four major areas of intellectual property protection:

"Copyright law, which protects original 'works of authorship.'
Patent law, which protects new, useful, and 'nonobvious' inventions and processes.
Trademark law, which protects words, names, and symbols used by manufacturers and businesses to identify their goods and services.
Trade secret law, which protects valuable information not generally known that has been kept secret by its owner."

The foregoing was taken from timestream.com article: Intellectual Property Law Primer that focuses on the issues from the perspective of a multimedia developer.

A like article from CSOonline.com with practical advice for information security professionals may be found here.

A much more detailed treatment of the topic is found in the article by Susan F. Olive: Intellectual Property Primer

Start Up Business Structure Choices

I taught a class this morning on entrepreneurship legal issues at the Duquesne University SBDC's GATE program where the appropriate legal structure for starting a small business was a topic for discussion.

This article from the SBA (in pdf format),Selecting the Legal Structure for your Business is a good summary of the applicable considerations in choosing whether to operate as a Sole Proprietorship, Partnership, C-Corporation, S-Corporation or Limited Liability Company (LLC).

More infomation about the federal tax consequences of each option is available from the IRS here and here.

9/13/2004

the Carnival of the Capitalists

The Carnival of the Capitalists for the week of September 13, 2004 hosted by Josh Cohen at d-42.com is up and contains a link to my article on How to Buy a Business

9/12/2004

New Online SBA 8(a)/SDBC Application

"The SBA unveiled a new electronic online application today. The goal is that the new online applications will make it easier, faster and less expensive for small businesses to apply for 8(a) Business Development and Small Disadvantaged Business Certification directly through the SBA Website."

From Law & Entrepreneurship News

Two Perspectives on Pitching

NW Venture Voice:

"The most important thing in having a successful pitch to a VC is to have a great business and a great team, but even if you have both it doesn't hurt to have a super crisp, logical, compelling pitch. Here are 5 basic tips that I have seen really work."

1. Outline
2. Use an "In a nutshell" slide
3. Make a clear, simple case
4. Use the XYZ method ("We are the only X company/product that solves Y customer problem in Z unique way,")
5. Put your best foot forward first and strongest


Forbes.com:

"Forget 'I think, therefore I am.' For entrepreneurs, the salient phrase is 'I pitch, therefore I am.' Pitching isn't only useful for raising money--it's an essential tool for reaching agreement on any subject. Agreement can yield many outcomes: management buy-in for developing a product or service, closing a sale, securing a partnership, recruiting an employee or securing an investment."

Natural Enterprise Final Excerpt

In a series of posts, Dave Pollard published excerpts from his upcoming book, Natural Enterprise: Making a Joyful Living with People You Love . Each post is full of brilliant entrepreneurial insights and thought-provoking commentary. The final installment, available here contains the following table of contents and links to all the blogged excerpts.

NATURAL ENTERPRISE

Introduction
Why Natural Enterprise?: The Business Case and Elevator Pitch
PART ONE:
Chapter One
ENTREPRENEURSHIP 101
Getting Started: Is Natural Enterprise Right for You? (includes What Natural Enterprise Is)
Chapter Two
A World of Ends: Understanding the New Economy
Chapter Three
Risk-Free Entrepreneurship: Filling an Unmet Need
Chapter Four
Assembling the Team
Chapter Five
Improvisational Planning and Day to Day Management
Chapter Six
Viral Marketing
Chapter Seven
Networking and Alliances
Chapter Eight
Beholden to No One: Financing Your Business Organically
Chapter Nine
Managing Cash and Working Capital
Chapter Ten
Avoiding the Landmines
Chapter Eleven
Success on Your Own Terms: Measuring and Tracking Performance
Chapter Twelve
Using Technology

PART TWO:
Chapter Thirteen
CONTINUOUS INNOVATION
The Importance of Innovation (parts 1-3 of this article)
Chapter Fourteen
Building an Innovation Culture (parts 4-5 of this article)
Chapter Fifteen
The Innovation Process (part 6 of this article)

PART THREE:
Chapter Sixteen
Appendix One
Appendix Two
SUSTAINING MOMENTUM
Entrepreneurial Business Evolution (today's post, above)
The Natural Enterprise Online Forum
The Natural Enterprise Coaching Service

9/10/2004

Entrepreneurs on Entrepreneurship

Looking for some inspiration in starting your own business? Look no further! This article from About.com quotes some of the world's most famous entrepreneurs. An example:

"When you reach an obstacle, turn it into an opportunity. You have the choice. You can overcome and be a winner, or you can allow it to overcome you and be a loser. The choice is yours and yours alone. Refuse to throw in the towel. Go that extra mile that failures refuse to travel. It is far better to be exhausted from success than to be rested from failure."
- Mary Kay Ash, founder of Mary Kay Cosmetics

Critical Advice on Critical Feedback

This essay from UIWeb.com explains how to give and receive constructive criticism stating:

"Good criticism serves one purpose: to give the creator of the work more perspective and help them make their next set of choices. Bad criticism uses the opportunity provided by someone else’s work to make the critic feel smart, superior or better about themselves: things that have nothing to do with helping the recipient of the critique."

How to give critical feedback

• Before you speak, know the goals
• Good and bad, is not the same as what you like or don’t like.
• Talk as much about what it is, as what it isn’t.
• Try the PNP sandwich (offer positive, negative, then positive comments)

Receiving critical feedback

• Shut up. Just shut up and listen.
• Ask clarifying questions.
• Refer back to the goals.
• Ask for what changes you can make that will satisfy the criticism.
• Take control of your feedback process.
• Pick your partners.
• Strive to hear it all, informally and early.

The Grass is Not Always Greener

This article by Foley & Lardner from Mondaq (free subscription required) explains that would be Googles looking to go public might want to think twice about the consequences, stating:

"Concerns over the high costs of complying with Sarbanes-Oxley (SOX) and other corporate governance reforms are causing an increasing number of public companies -- especially small- and mid-cap companies -- to consider going private."

9/09/2004

Tailor Your Value Proposition to Your Customer

From an article by Wendy Armstrong for the Pittsburgh Product Strategy Network:

"Distill your product’s promise into clear, concise, and credible prose and you have a value proposition. But, values are highly individual, so you may need a small library of them, depending on your audience and their distinctive needs."

As she walks through the steps to craft a family of solid value propositions, Ms. Armstrong further explains:

"The central objective of a value proposition is to convey to customers and prospects that you understand their needs and that you have a credible and attractive solution to their problem."

Bankruptcy Does Not Deter Entrepreneurs

From a BW Online post:

"We all know entrepreneurs are supposed to be risk takers. But this is off the charts. An SBA-sponsored study of 3,400 entrepreneurs whose companies had actually driven them into bankruptcy found that 25% planned to start another company immediately.

Why would so many who had failed willingly put themselves through the fire again?

Some say it's because entrepreneurs tend to share certain characteristics. They're achievement-oriented, optimistic, creative, and able to delay gratification, says Bala Cynwyd (Pa.) management psychologist David Weiman. "They have an ability to keep going even when they don't have others standing shoulder to shoulder with them," he says."

Via BusinessPundit

Insight into Conduct Leading to Large Punitive Awards

Plaintiffs in discrimination cases are always gunning for the multimillion-dollar punitive damages award. Such awards are relatively rare. In some cases, judges may find triable issues, yet not submit punitives. In others, punitives may be awarded, yet not in such high dollar amounts.

Some fact patterns are more likely than others to lead to submission and awarding of punitives. This case examined in George's Employment Blawg illustrates a couple of these patterns.

9/08/2004

Firing Is Never Easy

This article by Jerry Colonna for Inc.com offers these tips for undertaking the always difficult task of terminating the employment of a team member.

Be honest.
Be open.
Be willing to face the anger.
Understand the reactions of the fellow staffers.
Talk about what happened.
Lastly, above all, respect the dignity of the terminated staffer.

Via A VC

9/07/2004

Seeing Double in Software Licensing

From CNET News.com:

"The prevailing method of selling server software--based of the number of processors, or basic computing brains, that a computer has--is being made obsolete by changes in processor designs and server capabilities."

Know When and How to Delegate

This article from HBS Working Knowledge stresses the importance of effective delegation by executives, stating:

"Managers—promoted for their stellar performance as individual contributors—can find delegating especially challenging because they've scored major successes by handling problems themselves.But just as delegating has grown more difficult, it's also become more crucial for companies seeking to compete."

The article suggests taking these actions:

1. Make yourself let go
2. Ask, don't tell
3. Match tasks to people
4. Cultivate independent thinking
5. Link people with resources

Via BusinessPundit

Primer on Advisory Boards

This post by Steven Bayle is a primer for technology startups on establishing and working with advisory boards. As he points out, properly structured and managed, an advisory board can establish credibility in the marketplace and provide valuable assistance and advice on topics such as the company’s strategy, product offerings and technological direction. The post covers everything from determining the type of board to set up (customer, strategic, technical) to giving board members homework in anticipation of their participation in meetings designed to be interactive and interesting.

While the post touches on some of the legal issues involved in creating and serving on an advisory board, I would add the following taken in part from an article appearing in Tech Biz Florida:

Advisory board members:

§ Are not the Board of Directors elected by the shareholders.
§ Do not have same statutory protections afforded to elected Boards of Directors
§ Do not vote as part of the Board of Directors.
§ Do do not have policy-making powers.
§ Are not officers or employees of the company.
§ Do not have management authority in the company.

If your company decides to establish an advisory board, it should do so in a way that minimizes any risk of liability for the advisory director. Steps that can be taken include:

§ A written description of the role and responsibility of advisory board members, which make it clear that they have no policy-making powers, have no voting authority, and have no management authority in the company, but their role is solely advisory, subject to the review and approval of the company's Board of Directors and/or senior management.

§ A written record of the proceedings of advisory board meetings, which will reflect that the advisory board was acting consistent with the written description of its role in the company.

§ Some periodic monitoring of the role of advisory directors to verify that they are acting consistent with the written description of their role and responsibilities (these can be whatever is important to your strategic plan so long as they are not policy-making, operational, or managerial responsibilities).

§ Review of the company's D&O Insurance policy to make certain that the advisory directors are sufficiently protected if a lawsuit is filed against them.

§ Review of the company's articles of incorporation and bylaws and local law to make certain that the company will be obligated to indemnify advisory directors to the full extent allowed by law, and consideration of separate indemnity agreements between the company and its advisory directors.




9/06/2004

Less is More in Customer Service

From ChangeThis:

"Bruce Kasanoff: Your customers don't want more, they want LESS! Kasanoff uses examples to point out the mind-twistingly frustrating customer experiences that have become commonplace in today's corporations. Improve your customers' lives: Clone your best people! Anticipate your customers' needs! Make a don't-do list! (Item #1, don't ask for your customers' account number three times in one call!) Be flexible! Fix your customers' problems before your customers even know they have them! And above all, simplify, simplify, simplify!"

Patent Protection Strategy Benefits Start-Ups

This article by Rajiv Patel for VC Experts explains:

"Many start-up companies that have developed pioneering technology are eager to obtain patent protection. However, to develop an effective patent portfolio, a start-up company should first devise a patent portfolio strategy that is aligned with the company's business objectives."

The article continues by noting the following as possible business objectives: "bolstering market position, protecting research and development efforts, generating revenue, and encouraging favorable cross-licensing or settlement agreements."

A takeaway from the article is that, to minimize expense, a start-up company can develop an effective patent portfolio by focusing on high quality patents that cover key products and technologies and by initially filing less costly provisional patent applications.

A related article provides " a checklist for getting organized in preparation for developing a comprehensive patent strategy."

Pennsylvania Biotech Firms May Swap Tax Credits

From the Philadelphia Business Journal:

"Pennsylvania biotechnology companies, most of which are years from generating any revenue, will soon be able to [sell] their previously unusable research and development tax credits. "

Explore Patent Litigation Alternatives

From the Silicon Valley/San Jose Business Journal:

"Enforcement of intellectual property rights and, in particular, patent rights, is often a key business issue for many companies. But with its potential expense, business disruption and risks, companies cannot embark upon patent litigation blindly. Depending on the situation, there may be alternatives to litigation, such as licenses. In order to make an informed business decision, a patent owner or an accused infringer should conduct an extensive assessment of all options and potential outcomes before embarking on a patent enforcement campaign or responding to enforcement efforts. "

Cut the Jargon: Speak Plainly

From the WSJ StartupJournal :

"The ability to speak and write concisely and with clarity is fast becoming a competitive advantage for entrepreneurs and small-business owners (and for big companies, too). Articulating clearly what your business is, what kind of goods or services you sell and how much they cost helps the bottom line. Potential customers or clients appreciate clear and meaningful information. It even can make the difference between success and failure."

9/04/2004

Rube Goldberg Redux

This post from Emergic.org points to an elegant ad from Honda that brings to mind the legendary Rube Goldberg, the Pulitzer Prize winning cartoonist whose drawings demonstrate that people are often overwhelmed by complicating their lives.

Avoid New Business Pitfalls

"Most entrepreneurial businesses don't fail because of bad advertising, cowardice, owner laziness or inability to handle stress. They fail because they are poorly thought out, poorly researched, set up wrong, marketed wrong, badly managed, and given terrible business advice."

Read this article from How to Save the World for sage advice on how to avoid these pitfalls.

Women Mentorship Programs Work

The Memphis Business Journal reports:

"As the work force increasingly levels out in woman-to-man ratios, more companies and professional organizations are realizing the benefits of creating mentoring -- or support -- functions for their women employees to retain and advance them. "

Office Humor Links

From ishouldbeworking.com:

"All work and no play is boring, stressful, and unhealthy. Check out these great websites that poke fun at the rat race in one way or another (or at least give you something to do while you're on break)."

Managing Cash Flow Primer

This post from How to Save the World explains:

"Managing cash is one of the most tedious aspects of entrepreneurial business, but it's an essential one, and one that should not be left up to your accountant or outsourced. It's the pulse of your business' financial health, of customer satisfaction, and of the value that your enterprise is providing. Just like every other aspect of your business, with proper planning and management it can be a 'no surprises' experience -- which is exactly what you want it to be."

9/03/2004

Write a Business Plan that Works

This post from sitepoint.com explains how to write a business plan that is implented rather than one that sits on a shelf and gathers dust. An outline of the suggested questions to be answered and action items undertaken is as follows:

To Create Your Business Plan
Part 1: Strategic Foundation
1. What is your vision for your firm?
2. What are your specific financial goals over the next few years?
3. What is your target market?
4. What is your edge?
5. What hurdles do you face in achieving any of the above?
Part 2: Priorities
1. How can you better serve your best clients?
2. How can you attract more new clients from your target market?
3. How can you attract more new clients from outside your target market?
4. What new capabilities do you need to build in your firm?
o What new systems do you need in order to leverage your time and grow your organization?
Part 3. Action and Accountability Plan
1. Develop a monthly business development action plan.
2. Develop an action plan to build any new capabilities you identified.
3, Develop a similar action plan for new systems you want to put in place.

Via del.icio.us/dbayless

Startup success recipe from Eric Hahn

This post from Digitalyst analyzes and comments on an interview in RED HERRING of Eric Hahn, former CTO of Netscape, in which Hahn outlines his recipe for success for early-stage startup companies as follows:

"1. Identify a market with an underserved need and attractive economics which could potentially be pursued by a new company.

2. Build the best possible team, including an appropriate balance of domain experience and unbridled, youthful passion.

3. Get into the market with the absolute minimum viable product in the absolute minimum amount of time – while maintaining quality (it’s a hard balance to achieve – this is where experience really counts).

4. Do whatever it takes to delight your early customers (or users in a consumer business). Spare no expense to make every single one reference-able.

5. Listen and learn from your customers, technical experiences, competitors – develop metrics with which to measure yourself and use these to incrementally expand as fast as the market and capital will allow."

9/02/2004

Recap of The Sarbanes-Oxley Act

This article by McDermott, Will & Emery from Mondaq (free subscription required) outlines the principle provisions of the Act, its implementation by the SEC and implications for companies going forward.

Developments In Technology - July 2004

This article by Gowlings from Mondaq (free subscription required) highlights the following legal and regulatory developments and provides links for more information:

"Canadian Music Industry Appeals File-Sharing Ruling
Microsoft Awarded $4 Million Judgment Against Spammers
Violent Video Games Protected by Constitution
Bush Stiffens Sentences for Identity Theft
Service by E-Mail Ruled Insufficient
Airline Security System Dismantled Over Privacy Concerns
11th Circuit Asserts Copyright Jurisdiction
Governor Schwarzenegger Introduces Law for Better Auditing of Record Labels
Senate Panel Guts VoIP Bill
Judge Says VoIP to Be Governed by Feds, Not States
Kazaa and Ticketmaster Win Domain Name Disputes"

KJ-Diagramming Useful to Segment Markets

This post from new dog old trick contains a summary and links regarding the use of a core Japanese quality movement technique (also known as Affinity Diagramming).

The technique can be used to address market segmentation and other issues, such as strategic planning, usability design/user interface design, information design/information architecture,and other types of design problems.

Blawger Bowl...last call for Fantasy Football

From The Invent Blog:

"Blawger Bowl...last call

Room for one more blawger...if you've been on the fence as to whether or not to play for the inaugral Blawger Bowl (fantasy football)...last call!!!!
Email me for the group name and password."

Start-ups Opt Out of IPO's

The San Francisco Chronicle reports:

"A growing number of entrepreneurs, faced with spiraling accounting costs and stiffer corporate governance rules, are choosing to keep their startups private or sell them to a rival rather than take them public.

For young companies, the choice between going public and selling to a rival was once an easy one. That's because an IPO generates a much higher return -- as much as a third higher, according to some studies -- for the company's executives and early investors.

But in the wake of corporate reforms prompted by a series of accounting scandals, the decision is no longer clear-cut. "

Via Law & Entrepreneurship News

Court Considers Nutkin the Squirrel Case

From an AP report inYahoo! News:

"Will Nutkin become 'squirrel stew,' as a judge put it, or continue to live with her owners on their 77-acre spread in Schuylkill County? The fate of the gray squirrel rests with a panel of state Superior Court judges, who heard arguments Tuesday on whether she can be legally kept as a pet. "

Via Notes from the (Legal) Underground

The Return of the Venture Capitalists

From a New York Times article:

"Four years after the Internet bubble burst, the venture-capital industry is stirring back to life. Investments by venture firms rose 22 percent in the second quarter of this year, to $5.8 billion, from $4.7 billion a year earlier, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. "

Knowledge Management Critical for Start-ups

From a RealKM post:

"It might sound strange, but I think a knowledge management initiative is as important in a small and growing organization as it is in a mature global company. It's tempting to say that it is 'just a couple of people' who can communicate directly everyday. However, what people forget is that this communication exchange is lost forever by not being captured. If the start-up is successful, in the long run, it will struggle to grow. On the flip side, if a start-up has to lay-off people, which is not uncommon these days, the employee's 'knowledge' walks out the door because that knowledge was not stored in context in a knowledge base."

Via Jack Vinson

9/01/2004

Policies Lacking on IM and e-mail

From a survey by the AMA/ePolicyInstitute:

"Over one in five employers (21%) has had employee e-mail and instant messages (IM) subpoenaed in the course of a lawsuit or regulatory investigation. That’s more than double reported in 2001, and a 7% increase over the 14% reported last year. Another 13% have workplace lawsuits triggered by employee e-mail. Yet, in spite of the fact that e-mail and messages are a primary source of evidence—the electronic equivalent of DNA evidence—employers remain largely ill-prepared to manage e-mail and instant messaging risks."

Via TechRepublic.