The recent purchase of Skype by Microsoft for $8.5 billion caused me to recall an awkward meeting I had in 2005 with a particularly clueless group of cellular executives. Their utter stupidity is a bit disheartening, but highly instructional. Witnessing The Idiot’s Dilemma I recently had lunch with a good friend with whom I have a shared experience. Although we did not work at the same company (I was at CallWave and my friend was at SIPphone), during the mid 2000s, we both had the misfortune of attempting to entice cellular carriers to adopt the unique features enabled by VoIP (Voice Over Internet Protocol) technology. Some of these capabilities are finally entering the market, primarily introduced by non-telecom entrants like Google and Apple, such as: visual voicemail, screening voicemail messages and immediately connecting you to callers with whom you wish to speak, and displaying caller ID on your television. Cool stuff for circa 2005, unless you were an idiot working for a cellular carrier.
“The best time to plant a tree was 20 years ago. The second best time is right now.” Chinese Proverb, borrowed from Scott Dinsmore’s Reading For Your Success In the 1930’s, when Max Fleischmann (of yeast fame) brought his yacht into the Santa Barbara harbor, the local laundry trucks did the sensible thing. They lined up on the dock and patiently waited for the ship to arrive so they could get their “share” of its dirty laundry. This approach made sense to everyone; everyone except a young man named George Page, founder of Mission Linen. Rather than wait, Mr. Page jumped in a rowboat and met the yacht before it entered the harbor. The surprised Capitan, no doubt impressed by the young man’s drive, invited Mr. Page on board. By the time the yacht anchored, Mr. Page had closed a deal which gave Mission Linen the exclusive right to clean all of the ship’s laundry, thereby shutting out all the trucks waiting at the dock.
Note: This is part IV of the four part series. Access part I HERE, part II HERE and part III HERE. Marketers have long known that people are drawn to exclusivity. As discussed in Jedi Mind Tricks, scarcity and fear of loss are powerful principles of persuasion. Students expend small fortunes of their parents’ money to attend exclusive, private colleges. Hipster-wannabes routinely wait in line for hours for the opportunity to buy exorbitantly priced drinks in an exclusive nightclub. As noted in Contract Traps Entrepreneurs Should Avoid, exclusivity can kill a small company. Unfortunately, many Big Dumb Companies (BDCs) assume they must unfairly skew the market in their favor by precluding you from freely working with anyone you choose. Exclusivity excludes your startup from taking full advantage of future customer, partner and market opportunities. As such, deals are not exclusive, they are excludesive.
Note: This is part III of a four part series. Access part I HERE, part II HERE and part IV HERE. As noted in parts I and II of this series, agreements with Big Dumb Companies (BDCs) can be alluring and potentially fatal. In many cases, agreements contain the promise of future riches, much like a piece of cheese in a mousetrap. This series describes how entrepreneurs can craft company-changing agreements with BDCs, while avoiding Kiss of Death contract provisions.
“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” Eleanor Roosevelt - US Diplomat & Wife of President Franklin Roosevelt As an entrepreneur and startup investor, I have helped create companies which achieved two IPOs which collectively raised over $100 million, as well as two acquisitions which totaled $385 million. During those same 25-years, I also made innumerable mistakes. Entrepreneurship is best learned experientially. However, it is my hope that this article will help you avoid learning the following lessons the hard way.
This article originally appeared on Technorati: You can watch my 14-minute interview with Jason Nazar, Founder and CEO of Docstoc below. If you prefer to read a summary of Jason's responses, they are included below. If you have questions for Jason, please include them in the comments section. Messenger: Jason Nazar, Founder and CEO, Docstoc. Value Prop Twitter Style: Docstoc's mission is to: "Make every small business better"
Note: This is part II of a four part series. Access part I HERE, part III HERE, and part IV HERE. As noted in part I of this series, agreements with Big Dumb Companies (BDCs) can be alluring and potentially fatal. In many cases, agreements crafted by BDC lawyers resemble ConTraps rather than mutually beneficial contracts. This series describes how entrepreneurs can craft company-changing agreements with BDCs, while avoiding Kiss of Death contract provisions.
Note: This is part I of a four part series. Access part II HERE, part III HERE, and part IV HERE. Agreements with Big Dumb Companies (BDCs) are like DC Comic’s evil villainess, Poison Ivy. Both are seductive and alluring and both are potentially fatal. A startup’s most meaningful agreements are often struck with BDCs. You will no doubt craft agreements with companies of similar or even smaller size to your own. However, your greatest risks and greatest opportunities will arise from the deals you cut with larger entities. Fortunately, it is possible to craft lucrative deals with BDCs that do not limit your adVenture’s ability to charter its own destiny. Just as Batman repeatedly avoids Poison Ivy’s kiss of death, so too must entrepreneurs avoid the Kiss of Death provisions which BDCs attempt to include in their agreements.
I recently had the pleasure to chat with Firas Raouf, Partner at OpenView Venture Partnersregarding my Startup CEO Performance Review articles. If you have not had a chance to do so yet, you may want to scan Part I and Part II before you listen to my interview. The 12-minute podcast will likely make more sense if you first have a frame of reference for the approach I implemented. Click on the OpenView logo to listen to the podcast: _______________________________
Odysseus could not help himself. He knew the risks, but he had to hear the alluring sound of the Sirens’ song. In Greek mythology, the Sirens were a combination of birds and women who sang to passing sailors, enticing them to approach the shore and crash on its hidden shoals. To avoid wrecking his ship, Odysseus instructed his crew to plug their ears and ignore his orders, no matter how much he implored them to approach the Sirens’ island. Many entrepreneurs encounter a similar dilemma. They often identify expeditious ways to make money in the early days of their adVentures, which allow them to reduce the amount of capital they must raise from outside investors. Unfortunately, such initially alluring business models can ultimately result in their ruin. Thus, entrepreneurs must decide when to stop listening to the Sirens’ song of a quick buck and position their company to take advantage of long-term, sustainable business models.