A version of this article previously appeared in the Wall Street Journal. You have been planning to ask your long-time partner to marry you for months and the big day has finally arrived. In order to reduce your risk of failure, you ask your roommate, who has proposed to several times previously, to pop the question on your behalf. Sound crazy? This is the approach many startups take when they communicate their story to the market. Rather than directly explaining their value proposition with all the passion and heartfelt stridency that only an entrepreneur can deliver, they outsource this communication to a Public Relations (PR) firm. PR agencies are expensive versions of Cyrano de Bergerac. Their best attempts to woo the media will never equal your ability to sing your own praises.
A version of this article previously appeared in the Wall Street Journal. Avoid a simple pricing mistake which could sink your startup. The “D” word - Discounts. I buy my cars in December. Why? Because I am cheap and I know that car dealers are incentivized by the manufacturer to hit quarterly and annual sales goals. The rewards are in the form of co-marketing dollars and commission spiffs. Thus, the value of a sale at the end of a quarter can be significant, if the sale contributes to obtaining a manufacturer's incentive. Individual salespeople are commissioned in a similar manner, based on attaining monthly and quarterly goals. If selling one more car at the end of a quarter will earn a sales rep a trip to Hawaii, they may be willing to forgo most or all of their commission to get the sale.
A version of this article previously appeared on Forbes. George Powell is proof that you can do well by having fun. Rare and fortunate is the person who successfully converts their passions into a lucrative vocation. Mr. Powell, Founder and President of Skate One is such a man. The world’s largest skateboard company, Skate One produces many of industry’s best-selling brands, including Powell•Peralta Skateboards, BONES Wheels and Mini•Logo Skateboards. I am always on the lookout for inspiring entrepreneurs who have leveraged their passions into healthy livelihoods as they serve as instructive role models for my UC Santa Barbara entrepreneurial students. After speaking with Mr. Powell, it was clear he fit the bill. This is the first of a two part, extensive interview I recently conducted with Mr. Powell.
A version of this article previously appeared on Forbes. Raising too much cash, too early, can kill your startup. It can provoke spending on unproven business models, hiring employees before their talents can be fully tapped and entering into long-term, unsustainable relationships with partners, landlords and other third parties. To avoid these death knell mistakes, create a culture in which you and your employees (your CFO excepted) spend your precious cash with zero regard for how much money you have in the bank. Sound counterintuitive? Hardly. Startups should only spend their money on initiatives that deliver a discernible, measurable return on investment.
A version of this article previously appeared in the Wall Street Journal. “You miss 100% of the shots you never take.” Wayne Gretzky Imagine how difficult it would be to score in hockey if you were required to rely on someone who is not your teammate to convince another third-party, whom you have not met, to take a shot on your behalf. As crazy as this scenario sounds, it is very similar to the “scoring process” companies engage in when they track Net Promoter Scores.
A version of this article previously appeared in Forbes. Trade show veterans know that the louder you scream at an industry event, the less your voice is heard. Instead, you have to push the envelope of propriety to cut through the noise. Even at a show the size of Dreamforce, you can cut through the noise, but you have to push the envelope to do it. Dreamforce is the conference for sales and marketing professionals. Hosted by SAAS giant Salesforce, it is more akin to a circus than a professional event. The 2014 show hosted 135,000 attendees and boasted A-list guest speakers and performers like Hillary Rodham Clinton, Neil Young, Anthony Robbins, and Bruno Mars. There were 1,450 sessions and over 400 exhibitors, all vying for attention.
A version of this article previously appeared in the Wall Street Journal. Freemium business models are popular because they allow startups to quickly drive user adoption. Unfortunately, many of these companies fail to properly monetize such non-paying users. Let's face it. It's frankly easier to accelerate your startup's growth and show faux traction if you omit the pesky step of asking users to pull out their credit cards.Let's face it. It's frankly easier to accelerate your startup's growth and show faux traction if you omit the pesky step of asking users to pull out their credit cards. The freemium approach offers users access to online solutions at no charge. Yet too often, entrepreneurs embrace giving away their products and services for the wrong reason - they are simply reticent to ask for payment.
A version of this article previously appeared in Forbes. Despite the fact that I teach entrepreneurship at UC Santa Barbara, I do not believe that entrepreneurs are created in classrooms. Instead of trying to teach students to be an entrepreneur, I expose my entrepreneurial students to tools that will help them solve real-world problems.
A version of this article previously appeared in Forbes. Rose Broome, Founder of HandUp is rocking the non-profit world. HandUp allows donors to hyper-focus their donations to individuals with specific needs. This is a game changer for the homeless. Rather than panhandling for spare change, HandUp, with the help of its partners, allows people in need to create a video which tells their story. Instead of putting their handout for money, they can give passersby a card which contains a URL to their video. Donors can then make targeted donations, knowing that 100% of the money will be applied to removing obstacles which are keeping the person in poverty. In one instance, a HandUp client had secured an apartment, but they needed money for the security deposit. HandUp collects the money and then provides it directly to the landlord, ensuring that the donors’ funds are properly deployed.
A version of this article previously appeared on Forbes. Some of the all-time greatest business deals involve entrepreneurs who viewed the scope of their negotiations in terms of decades, rather than years. Too often, entrepreneurs negotiate deals which consider a relatively short-term time horizon. This tendency is understandable, as most business negotiations address near-term objectives, such as driving incremental revenue or acquiring customers. However, shrewd entrepreneurs look beyond a deal’s near-term impact.