A version of this article previously appeared on Forbes. After 28 years as a public-school teacher, Bob Wood reluctantly left the classroom and took the helm of his elementary school. During his 10-year tenure as Principal, his team was awarded the White House’s National Blue Ribbon, a distinction granted to the top 0.3% of all elementary schools nationwide. Under Bob’s leadership, his school was also named a Distinguished School by the California Department of Education, earning an unprecedented score of 10 out of 10. As noted in You're Never Too Old (Or Too Successful) For A Mentor, Bob is my mentor and friend. Thus, I was honored when he agreed to share his insights regarding the fundamentals of success with my UC Santa Barbara entrepreneurial students.
A version of this article previously appeared in Forbes. We’ve all met them. The world’s out to get them. Every boss, coworker and subordinate is scheming to assure their demise. Setbacks are never their fault. They are a victim. Victims are bad enough in our personal lives, but they can be especially disastrous at a startup because a small company’s culture can be disproportionately poisoned by a single bad hire.
A version of this article previously appeared Forbes. When entrepreneurs describe their venture, they are often met with encouraging words, such as: “Great idea. I wish I had thought of that.” This propensity for people to be polite when you discuss your startup can make it difficult to determine who really believes in your opportunity and who is just being nice. Fortunately, you can separate the polite from the committed by issuing the Blondin test. Each generation, a few magnetic personalities emerge and generate a mania of public interest. During the mid-19th Century it was Jean Francois Gravelot, who wisely abandoned his given name and dubbed himself The Great Blondin. He was a true rock star of his day.
A version of this article previously appeared Forbes. Car companies spend a significant amount of money on superficial design features, including the timbre of the sound emitted when a car door is shut. Why? Because many consumers value design features over those which impact performance. Even less time is spent on developing the aspects of a car that become evident long after the purchase is completed. For instance, have you tried to use a car jack lately, let alone the toy-like spare tires included in many cars? These “hidden” features seldom cross a consumer’s mind at the time of purchase and thus do not impact the buying decision. However, they clearly have a long term impact on the customer’s overall satisfaction and thus their propensity to purchase additional products in the future.
A version of this article previously appeared Forbes. Entrepreneurs see the world like a cash booth from a 1950’s game show. On such shows, winners were placed in glass booth filled with money. Once the timer was started, a fan blew the money about and the contestant had a few seconds to grab all the cash they could hold onto. Once you begin seeing the world with the eyes of an entrepreneur, you realize that money-making opportunities are all around you. I encourage my UC Santa Barbara students to launch mini-ventures while in school so they will begin to see the opportunities that surround them. Along the way, they grab some cash while stressing their entrepreneurial muscles.
A version of this article previously appeared on Entrepreneur.com. Did I passed on Uber’s seed round? No. It’s worse than that. I never even bothered to listen to Travis’ pitch, even though I was repeatedly offered the opportunity. I then passed on Uber’s A Round as well, which I thought was valued too high, in light of the company’s progress. Too bad, as the initial funding round has increased over 4,000 times in value, making a $250,000 investment worth more than $1,100,000,000. Nope, that’s not a typo. Two hundred and fifty thousand would have netted my firm more than one billion dollars. As discussed in Why I Passed On Twilio, VC's love to talk about their successes, but seldom publicly acknowledge their mistakes. However, passing on a killer investment is not the worst error an investor can make. It is far more detrimental to one’s returns to make investments in companies which fail to return capital. A VC has done their job when their funds include enough great companies to generate an industry-leading outcome. Thus, while it is painful for a great investment to pass you by, the pain is wistful, not acute.
A version of this article previously appeared Forbes. Professional investors do not fund great ideas. Instead, they fund proven businesses. The reality is that most venture capitalists are not very venturesome. Thus, it is incumbent on entrepreneurs to turn their ideas into viable businesses before seeking venture funding.
A version of this article previously appeared Forbes. A very good friend of mine has heard me tell many a tale of trips in which I have scored free drinks, gratis hotel and car rental upgrades and various travel freebies. However, without experiencing my stories first hand, he always suspected there was a degree of embellishment involved to make my stories a bit more entertaining. We recently had the opportunity to travel to Hawaii together and I was able to show demonstrate the power of a little respect and an authentic smile.
A version of this article previously appeared on Forbes. It is no secret that the number of private companies with valuations in excess of one billion dollars has skyrocketed since the start of 2014. As show in CBInsight’s chart, the number of such “unicorns” created during the first half of 2014 was roughly equivalent to the number created during the prior three years. The duct tape securing the faux unicorns’ horns won’t hold up to the market’s scrutiny forever. The inevitable outcome will be the collapse of the weakest companies, while those with sound underlying business models will be recapitalized with reasonable valuations. If such write-downs only impacted the faux unicorns and their avaricious investors, there would be little need for alarm. Unfortunately, the coming market correction will reverberate to all stages of venture investing.
A version of this article previously appeared Forbes. Long before author Stephen King sold over 350 million books, he was a budding entrepreneur. In order to pay his college tuition, young Stephen created a sole proprietor startup with a very entrepreneurial pricing structure. Leveraging his core competency, Stephen cranked out term papers for his fellow students. Papers that resulted in an “A” grade earned him $20, “B” papers cost his customers $10. There was no charge for “C” level papers. The most enterprising aspect of King’s business model was his promise to pay his customers $20 for any paper that didn’t earn at least a C grade. According to King, “I made sure I would never have to pay, because I couldn’t afford it.”