Failing Fast

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My friend, entrepreneur Marc Kramer has started about 20 businesses.  Some have succeeded, others have not.  Among his start-ups,  I asked himScreen Shot 2015-12-21 at 9.00.45 AM if he got signals early on the he had a clunker on his hands, and if so, what the signs were.

Generally, he said, he knew within about 120 days whether or not the concept is going to fly.  Here are some of the sign posts he saw along the way that informed his thinking.

Little word of mouth.  Kramer says word of mouth is the ultimate acid test.  “If consumers are using your product, and are not excited enough and satisfied enough to tell friends, family and colleagues about it, your product or service is unlikely to succeed.” read more

Generals Don’t Inspect The Bullets

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IMG_0713As the content arms race rolls on, I’m beginning suspect that some CMOs are getting off track in their approach to content marketing.

Too much oversight.  Too much strategy. Too much handwringing.

In my experience, the primary value of content marketing is catching a prospect at the moment they happen to be searching for the product or service your enterprise offers.  And in search, one of the primary variables driving rank is freshness.

Catching a prospect mid-search means, for better or worse, content distributed across social media platforms is nothing more than a rifle shot.   The only consideration after it’s been fired, beyond a brief evaluation of its effectiveness, is loading up the chamber and firing another. read more

From Unicorn To Unicorpse In 12 Painful Steps

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My client was a unicorn way back in 2008, before the present day meaning of the word was repurposed to mean private companies valued at more than $1 billion.  Today, the company is worth about $30 million, a loss of 97% of value.  Here’s how the company’s 12 step descent went.  Screen Shot 2015-12-21 at 9.00.45 AM

  1. Invent a new financial product.
  2. Validate the concept by putting personal capital at risk.
  3. Fearlessly try new ways to sell the product and show-up every day willing to reinvent the company.
  4. When when the right marketing mix that is found, make a huge, eight figure bet on it.
  5. When the concept is validated and profits are accelerating, bring in private equity investors as majority shareholders and expand the business further.
  6. Begin replacing the founding entrepreneurial management team with professional managers.
  7. Let the professional managers refine the company’s processes and practices such that they are “customary and reasonable” to reduce/eliminate any liability claims from future shareholders.
  8. Use the stable earnings of the company to take on nearly a billion in debt and use the bulk of the proceeds to pay dividends to private equity investors and others.
  9. Get ousted by the private equity investor.
  10. Watch the private equity firm use its close ties to Wall Street to get a bulge bracket investment bank to take the company public.
  11. Months after the initial public offering, read a press release announcing a new strategic direction for the company.
  12. Watch the stock go into free fall as earnings swing from positive to negative under a massive debt load and management distraction.

The inflection point began at step seven in my view.  Perhaps this was nobody’s fault per se.  How could the company orchestrate a liquidity event with entrepreneurial skeletons in the closet?  For all the other unicorns out there, maybe this offers a cautionary tale. Step eight? Perhaps some restraint.  Step 11?  The most egregious in my view because from the rear view mirror, it looks a lot like like a willful abuse of public trust. read more

50 Questions Your Business Plan Should Answer

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Sadly, most investors don’t read business plans.  However, writing one is the only way you will be able to answer the following 50 questions you will be asked before investors show up to the closing table.

1. What is the price of your product or service and why?

2. How much capital is required to execute your business plan?

3. How much is the company is worth?

4. What are your company’s existing products/services?

5. What are the use of the proceeds?

6. On a summary basis, what is the historical financial performance of the company (even if, and perhaps particularly if, you have no revenues)? read more