Inside VT KnowledgeWorks

Are You a Born Entrepreneur?

From Sylvia Parsons, intern with Handshake Media, Incorporated, a VT KnowledgeWorks member company:

You're invited to take this quiz from Forbes.com to determine if you are a "born entrepreneur."

Feel free to share your results and feedback in the comment section of this post.  You'll help me better identify the attributes of successful entrepreneurs and the entrepreneurial spirit.

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Sylvia Parsons will complete her Master's Degree from Virginia Tech in Human Development in the fall of 2009.  She is an intern with Handshake Media, Inc., and with Better Agreements, Inc. "There's Something About Her," the series by Sylvia Parsons, can be found on Handshake 2.0 under
Women Entrepreneurs.  Feel free to follow Sylvia Parsons on Twitter.

Origins of Entrepreneurship

From Sylvia Parsons, intern with Handshake Media, Incorporated, a VT KnowledgeWorks member company:

It's the age old question of nature v. nurture:  Are entrepreneurs born or raised? Although it seems the safest answer, I have to say both.

Initially, I was inclined to agree with Forbes.com and state that entrepreneurs are born. At least one might be born with the entrepreneurial spirit. I’ve had the itch since childhood - always creating and innovating new games and inventions. Now, as I complete Graduate School, I know I will not be satisfied until I lead my own enterprise. Even then, I will always be driven toward more. I speak to woman entrepreneurs, and many echo the same sentiment. Some people just can’t shake that self-starter attitude.

As I learned through a discussion with Better Agreements, Inc. Director, T’aiya Shiner, drive alone is not enough. To create the wealth and growth necessary for success, one must also possess (or leverage a team that possesses) business sense, administrative tact, and communication skills. Anyone born with all these skills is a destined powerhouse.

So does that mean everyone else with a good idea or desire to be self-employed should just throw in the towel?

Of course not. 

Some people can be born with the spirit and never actualize it into entrepreneurship. Others have what Thomas Harrison, author of Instinct, describes as “latent traits” of the spirit and don’t even know it.

I am writing a series of blog posts on women entrepreneurs because I am ready to take the first step. As my mentor, Handshake Media, Inc. founding President/CEO, Anne Giles Clelland, demonstrates, through self-reflection, one can address personal challenges and leverage strengths to become a powerhouse.  

The learning curve may be steep, but armed with determination and the right tools, it can be climbed.

***

Sylvia Parsons will complete her Master's Degree from Virginia Tech in Human Development in the fall of 2009.  She is an intern with Handshake Media, Inc., and with Better Agreements, Inc. "There's Something About Her," the series by Sylvia Parsons, can be found on Handshake 2.0 under Women Entrepreneurs. Feel free to follow Sylvia Parsons on Twitter.

The First Sale

From Z. Kelly Queijo:

Recently, the founder of an information technology (IT) start-up asked if I thought his software was something a salesperson would want to sell. Knowing that, as reported in Entrepreneur.com, the reason most businesses fail within the first five years is due to lack of sales, I felt the weight of his question. "Will someone want to sell this?”

What had worked well for me as a salesperson was believing that the software I sold offered a solution to a problem. I had passion, knowledge, and even experience as a former client - and being a converted client creates a terrific background for selling. But, a start-up doesn't get that with something brand new. A new business starts from scratch - the right fit has to be found for the product and for the company.

Alec Siegel, Director of Blacksburg Operations at S.R. Clarke, Inc., a recruiting firm specializing in the technology space, says, “Selecting the right sales person can be the most crucial decision a business ever makes. You have to determine why would someone want to work for you. They have to have a good story to sell.”

The tables are turned. Usually a prospective hire has to “sell” him/herself to the company, but before that can happen, the company must convince the prospect that they have something worth selling. According to Siegel, other factors enter into the equation as well: the length of the sales cycle, base pay vs. commission, and direct selling vs. distribution channels.

“Start-ups don't have a lot of money to incite a sales professional, so it's more common to offer a higher commission with a lower base. You know the saying: 'you've got to spend money to make money?' This is true especially when your sales cycle is lengthy." Siegel says to keep in mind that if a company has a six-month sales cycle, the sales person will need to be covered during that time.

So what does this mean to the start-up? It means the first sale made will be the most important one - the one made to the person hired to represent the product or service.

***

Z. Kelly Queijo writes about business and technology, people and their passions.  She is a frequent contributor to Handshake 2.0, an enterprise of Handshake Media, Incorporated, a VT KnowledgeWorks member company.

Don't-Dos for Entrepreneurs

An excerpt from A Dozen Don'ts for Entreprenurs by Guy Kawasaki, 6/30/09:

1. Don’t worry, be crappy.
2. Don’t give out lofty titles.
3. Don’t hire your family.
4. Don’t sweat valuation.
5. Don’t believe venture capitalists.
6. Don’t create lofty forecasts that you call “conservative.”
7. Don’t believe that the exception is the rule.
8. Don’t focus on partnerships.
9. Don’t build out your infrastructure.
10. Don’t assume you’ll ever raise another round.
11. Don’t compare your intentions to other employees’ results.
12. Don’t ask people to do something you wouldn’t do.

Founding a Company Is the Most Efficent Way to Create Wealth

As the founder of a start-up company, I had to laugh when I read this from The Start-up Guru: Y Combinator's Paul Graham, Inc., June 2009:

Of all the things that Paul Graham hates about running a start-up -- and there's not a whole lot about it that he likes -- the customers bug him the most. Everyone has a problem with your product, and people are constantly calling to complain about things you cannot possibly fix. Then there is the fact that you are doing everything for the first time, which creates a crippling sense of uncertainty, as well as a persistent fear that a single bad decision could doom the whole enterprise. There are squabbles with co-founders and combative negotiations with investors and that gut-wrenching period when you realize that success isn't going to come quickly or easily -- Graham calls it the Trough of Sorrow. Graham's start-up days are more than a full decade behind him, but he can't help recalling them with a shudder. "It's like talking to someone who went to war," Graham says. "It s---s to run a start-up."

The "Trough of Sorrow," indeed.  Yep, sometimes.

Then there's this, which, of course, explains everything:

It's odd to hear Graham speak this way, because he now oversees what is perhaps the most ambitious campaign of start-up creation ever attempted. His company, Y Combinator, is a hybrid venture capital fund and business school that invests in, advises, and, literally, feeds 40 or so early-stage businesses a year. Investments are small -- less than $25,000 per company...

Why is Graham, an avowed start-up hater, doing this? Because for all the pain, he believes that founding a company is the most efficient way to create wealth -- for investors, for founders, for society at large -- and because he thinks he can make starting a company a lot less painful. "There's this classic pattern that has happened over and over again throughout history in which something is made one at a time, very expensively and unreliably by hand, and then someone comes along and figures out how to make large numbers of them cheaply and reliably," Graham says. "We're pulling this kind of transformation with venture funding. We're mass-producing the start-up."

Very interesting, Paul Graham, I love hearing your idea that founding a company helps produce wealth for society at large.  And thanks for your generous advice for entrepreneurs.

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Note:  Since posting, the first page of the article has become unavailable, but a related video has been added here.

The Challenge of Health Care Benefits for Entrepreneurs

Sam English's comment on Hire Your Local Entrepreneur was too thoughtful and thought-provoking not to feature in a post.  I have his permission to share it here.  Hire Your Local Entrepreneur included an excerpt from the Wall Street Journal, 6/16/09, Entrepreneurs Take Second Jobs to Stay Afloat.

From Sam English:

A way to describe this approach [to supporting regional entrepreneurs] is risk mitigation. In the same way an investor ($ investor or investor of sweat equity) mitigates risk in a portfolio by diversifying investments based on their risk/reward, a smart entrepreneur can use the same approach in judging where to invest time and effort.

Layered on top of this is the additional complication of the need for immediate cash versus downstream rewards. Offering part-time jobs to entrepreneurs can help. Particularly if health care benefits are included. I contend that the biggest hurdle to United Sates entrepreneurs is health care coverage.

Additionally, a regional seed-fund could help many of our local companies/entrepreneurs to decrease the risk during the early stage.

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Sam English is with CIE Partners, an independent Roanoke-based organization promoting innovation and assisting entrepreneurs, small businesses, and nonprofit organizations in the western region of Virginia.

Hire Your Local Entrepreneur

According to the Wall Street Journal, 6/16/09, Entrepreneurs Take Second Jobs to Stay Afloat.

While the second job can be considered "a bridge to better times," one entrepreneur pointed out the dilemma of moonlighting:  "'If I tell people that I was looking for a job, would they think I'm stopping the company?' she asked. 'How is it going to look to my business contacts, to people in the community, that I'm looking elsewhere to get paid?'"

Another pitfall of a second job is " moonlighting may hurt their focus or impede business growth."

To support businesses we believe in, we buy their products.

What can regional advocates of high-tech entrepreneurship do to support local high-tech entrepreneurs when their products are still in the development stage - or whose market may be whole industries, not individual consumers?

There's talk of the development of a local angel investor fund.  That would help. 

Until that happens, maybe each of us can give a local entrepreneur a part-time paying gig. And keep it to ourselves.  Just like their products that  we protect through silence, our local entrepreneurs, too, are still in the development stage.

For Entrepreneurs Who Value Sustainability

Over a year ago, Bob Willard kindly wrote a guest post for Inside VT KnowledgeWorks, Entrepreneurship and Sustainability. 

Bob has a new book coming out:  The Sustainability Champion's Guidebook: How to Transform Your Company.

I asked Bob Willard if he would be willing to revisit his advice to entrepreneurs who value sustainability.

Bob Willard replied:

I’ve mulled this over for a few days and as I re-read what I offered last year, I think my three pieces of advice:

1. piggy-back the climate change / energy crisis
2. be relevant, and 
3. develop a compelling business case

still apply  – even more so because of the amount of economic stimulus money being directed toward green energy.
 
If anything, I’m even more strident about the original three.
 
All the best.
 
Regards, 
Bob Willard
bobwillard@sympatico.ca  
bobwillard@sustainabilityadvantage.com  
905-668-3525
www.sustainabilityadvantage.com

***

Thank you so much, Bob!

Here is the advice for entrepreneurs Bob Willard offered in his original post for Inside VT KnowledgeWorks:

1. Find a way to connect your product / service to climate change mitigation, carbon reduction, energy savings, and / or carbon footprint reduction. The two biggest sustainability issues / risks on the horizon threatening the value of corporations are the Climate Crisis and the Energy Crisis, joined at the hip by dependency on fossil fuels. Sooner or later, regulatory bodies will put a price on carbon, either through carbon taxes or cap-and-trade systems, or both. The explosion of “green computing” and venture capital invested in “clean tech” are signals the business community is starting to “get it” on these risks. High-tech entrepreneurs need to connect their offerings to carbon risk mitigation. They need to coat-tail the climate and energy crises. (Your blog shows you have personal experience with risk. That’s what this is all about.)

2. When marketing your high-tech offering, connect it to existing priorities / problems / challenges faced by your customers’ senior executives. Make it relevant. Meet the executives where they are and help them see new and better ways to use your offering to solve today’s problems and challenges.

3. Develop a holistic, comprehensive, quantified business case for your high-tech offering that includes co-benefits. The green building industry has discovered that the biggest benefit from LEED standard buildings is not energy savings; it is occupant productivity and health benefits. Who would have thought? Similarly, high-tech entrepreneurs may need to include a complete menu of benefits similar to the seven I outlined in my St. Louis presentation in order to create a compelling business case that galvanizes executive commitment.

Lies Entrepreneurs Tell Themselves about Work and Family

Excerpt from Steve Blank's, Lies Entrepreneurs Tell Themselves:

In hindsight I had convinced myself that throwing myself into work was the right thing to do because I succumbed to the four big lies entrepreneurs tell themselves about work and family:

• I’m only doing it for my family
• My spouse “understands”
• All I need is one startup to “hit” and then I can slow down or retire
• I’ll make it up by spending “quality time” with my wife/kids

None of these were true.  I had thrown myself into a startup because work was an exciting technical challenge with a fixed set of end points and rewards.  In contrast, relationships were messy, non deterministic (i.e. emotional rather than technical) and a lot harder to manage than a startup.

Traits of an Entrepreneur

From Entrepreneurial Finance: Finance and Business Strategies for the Serious Entrepreneur, by Steven Rogers, 2009:

Building a successful, sustainable business requires courage, patience, and resilience. It demands a level of commitment that few people are capable of making. Membership in the "entrepreneurs club," while not exclusive, does seem to attract a certain type of individual. What, if any, are the common attributes of successful high-growth entrepreneurs?

While it is impossible to identify all the traits that are common to all entrepreneurs, it is possible to describe certain characteristics that are exhibited by most successful entrepreneurs. A survey by consultant Richard Hagberg identified the top 10 characteristics that define entrepreneurs. These characteristics are:

1. Focused, steadfast, and undeviating
2. Positive outlook
3. Opinionated and judges quickly
4. Impatient
5. Prefers simple solutions
6. Autonomous and independent
7. Aggressive
8. Risk
9. Without deliberation and reactive
10. Emotionally aloof

While this list is thorough, the addition of a few more traits would make it more complete:

• Opportunist
• Sacrificer
• Visionary
• Problem solver
• Comfortable with ambiguity or uncertainty