I was lucky to attend Central College a private, liberal arts college in Pella that afforded time and flexibility to connect to faculty beyond the traditional lectures and grades. Friendships developed then and remain true today. So, it was a mixed emotion with which I attended Dr. Jann Freed’s retirement party recently. Even though I was a Computer Science/Math major, Jann’s Organizational Theory and Behavior class made a huge impression. During her retirement ceremony, as speakers came and went, honoring (and eulogizing!) her career, I was struck with her reference to the 5 stages of a team.
Psychologist Bruce Tuckman first came up with the memorable phrase “forming, storming, norming and performing” in 1965. He later added a 5th stage – adjourning. I truly believe that all of these stages apply amazingly well to the concept of business as they do to a team.
When you start a business, you love the idea of others coming along to share your risk, passion, glory, money, and more. The team forms with 2 people and grows to 10, 20, 50… As the team storms its products out the door, normalizes strategy into tactics and performs beyond its own wildest imaginations, the human element creeps in slowly and quietly with tiny steps. Partners lives, passions and goals morph and often in separate directions. And then comes a time when partners have to separate. AND THE TROUBLE BEGINS.
As many of my friends in the legal profession tell startups dozens of times–plan and formalize a legal document. Don’t leave anything to verbal. Don’t assume anything. Your partnership, like all others will break. If you are the rare duo and no business reason breaks it — human mortality will end one of your lives someday — and it will break. Plan for it now while all is nice and comfortable, happy and with a bright future.
To plan for such an adjourning, you have to have a basic buy-sell agreement. It may be something 1/2 a page long or 10 pages of details that cover esoteric elements of trusts and estates. It may contain formulae or simple instructions. It may go into trigger events or the desire for a breakup. Whatever it needs, it needs to be formalized and memorialized in your corporate paperwork while you’re still dating each other, in love and with roses dotting the path to success. Sit down together as partners, write down your priorities and share them with your lawyer. Then file the document away in the safe for the unfortunate day when you will separate.
Remember, even marriage, the global partnerships practiced worldwide, formalized in front of family, friends, religious leaders, co-workers, sometimes accompanied by vows, break. All you have is an idea that germinated over a beer in a restaurant and the plan drawn up on the paper tablecloth on which your food was served. It needs an adjournment plan.
Author: Tej
Central Iowa Technology wantrepreneurs – your opportunity is here!
I have an exciting opportunity to share with my fellow techies in Iowa, especially the central Iowa region. If you have been dreaming up the next killer app or the tech toy but were either short of cash, peer feedback or other hangups, your home State has a contest that may be of interest to you.
The Business Innovation Zone (http://www.bizci.org) is sponsoring a contest to attract new ideas and choose a popular winning idea to win $5000! If you can generate enough excitement about your idea statewide, you also stand to win an additional $10000!
If you’ve read the history of technology in the United States to any depth, you know that Accidental Empires don’t come from America’s largest corporations. Big ideas have been born in dorm rooms, garages, school buses and the playground.
This is your chance to expose your idea –
1. Grab a video camera or a webcam
2. Record a 1 to 5 minute pitch of your idea
3. Create a login and submit your idea at Dream Big Grow Here (http://goo.gl/hk2W9) between now and August 15th, 2011
…and now the MOST IMPORTANT STEP…
Starting August 16 market your idea to as many people in your circles, walls, address books and more to generate votes at http://www.dreambiggrowhere.com.
There are a few rules and FAQs that apply to this contest — please read them at http://www.dreambiggrowhere.com/
This is free capital for simply verbalizing and marketing your idea – don’t let it slip away!
What’s in it for me? I am a Principal of Startup City Des Moines, a sponsor and supporter of this contest.
Successful entrepreneurs evolve
I attended a very interesting and informative session on Capital Markets outlook sponsored by Mike Colwell @ the Biz. Presented by Matt Kinley of the Pappajohn Capital Resources and Equity Dynamics, the seminar presented the state of the market, their trajectory from 1998-present day and what anyone building a business would find useful.
A few strains of information were quite clear –
- Capital is available to the right businesses in most market conditions
- There is a good time and a bad time to raise capital
- Positive cash-flow is the ultimate asset to any business
- Prepare, Pitch, Follow-up and Delivery are key
- The market between 1998 and 2011 has changed significantly and successful entrepreneurs have evolved with it
The last bullet was my key takeaway. In 1998, for example, history shows that raising a few million bucks for an idea in exchange for equity was an oft-executed strategy. Ideas were pitched, easy money flowed, execution happened in pockets and many succeeded and others did not. Between then an now, private capital has shrunk by 89% (Matt’s data – see the slides when they’re up at the Biz) while ideas multiply daily.
Entrepreneurs, therefore, have evolved with the market. Many have realized that germinating the idea with a very select, core team of employees/partners can take the idea from thought to action. The same ideas can be further developed one or more times into a product and potentially monetized early. Bo Fishback’s presentation from BigOmaha about the birth to release of Zaarly is representative of such evolution. Though Zaarly has received funding already, it was working on its idea long before $$ came in the door.
So, entrepreneurs who focus on transforming their idea to reality and can demonstrate the product seem to have a better shot at market success, whether it is through demonstrable product for raising $$ or toward outright positive cash flow through monetization of their idea.
Where are you heading?
BigOmaha – What a rush!
I just came back from the BigOmaha conference presented by Silicon Prairie News. Held at Kaneko in downtown Omaha, this conference brought together people with ideas big and small. Some ideas were hatching, others had formed billion dollar businesses. Yet, the energy kept the audience hopping, the phones parked and the ears intently listened. How the heck did 500 people suddenly gather in flyover country, mingling with wantrepreneurs, entrepreneurs, press, government, friends and, yes – in Omaha, NE – even a live cow.
The Des Moines participants turned out in full support representing Dwolla, Entrepreneurial Technologies, Far Reach Technologies, Brown Winick Law, 48Web, Scoreyard and more. The lineup of speakers had been impressive to read about, but reality rocked the bios and speakers managed to excite, inspire and challenge throughout the day. I was gratified to see B Companies use the opportunity to inspire social entrepreneurship in so many sessions, inspiring me to not only learn from organizations like SamaSource, Ecko and Warby Parker, but also go out an buy their products.
Though this was my first conference where the idea of startups was the connecting theme, it certainly wasn’t the first business building exercise. I was often reminded of lessons learnt from speakers like Mahan Khalsa and Jim Cecil from Microsoft’s now rebranded Fusion conference. Where speakers previously spoke of how to build businesses, the focus now was purely the execution of ideas, continuous improvement, growth and deal flow.
The five key takeaways for me were –
1. Ideas are a dime a dozen; execution is key!
2. Your legacy is how your family remembers you when you’re gone – so why do you give a damn about the world?
3. Successful execution requires guts, paranoia, risk aversion and unwillingness to take no for an answer
4. Awesome innovation is happening all over this ‘flyover’ zone called the midwest
5. Startup Weekend, Thinciowa, BigOmaha, Startup Drinks and Techbrew like events are juice for the entrepreneurial soul – don’t miss any of them!
In college looking for a job? Why not create one instead?
A question that has perplexed me recently has to do with the incredible brainpower that leaves colleges and universities only to be stuffed into a cubicle. Why do college students, filled with risk aversion, swimming in ideas, surrounded by similar and opposite minded people, with access to incredible faculty, services and support gravitate toward a job?
It is hard to ignore the stellar successes of business launched at/during college by people like Gates, Dell, Zuckerberg, et. al. We know that like these successes, there exist failures of many businesses. But are those successes and failures any different than those achieved in a job? The risk of failure at this stage is worth the chances of success.
Many students are looking to start a life after poverty, one where they buy their new car, a house, get married and have babies, immediately launching themselves into years of loans and servitude. A car and a house are liabilities and babies require a steady paycheck to pay for diapers and health insurance. How about utilizing your skills in living in poverty to not just earn money, but rather CREATE money? When you live the life of a startup, making a product with little or no resources, selling it to fulfill an unmet need, you can create something real, of value and learn critical life and business lessons at the same time.
Each job you create has a multiplier effect — you earn money from your work and off the work of others who choose to work with you.
Surely, the desire to go get a job is steeped in needing to make payments on the student loan that will start requiring monthly payments soon after graduation. Make a short term compromise — work for someone else just enough to pay for rent on an apartment, gas for the car, payment on that loan and invest the remainder of your time in creating your product. You already know how to live on 3 hours of sleep a night — find a way to bill the remainder to those who need your services. Your skills may be in drywall finish, programming, taxes, accounting, retail, auto repair, gun maintenance, brewing beer, valuation of antiques, writing, teaching, and more — all skills that can earn you 20 bucks an hour as an employee or 75 an hour as an independent business owner.
Parents, Grandparents, aunts and uncles will tell you that the risk isn’t worth it and a job is the ultimate reward — BULL! Ever hear of LIFO principles — they apply to jobs too. Last hired is first laid off with little remorse. The jobs of your parents and grandparents went poof in the last economic downturn along with a large portion of their 401ks and more. Rightfully, many businesses disappeared too, but the business owners are returning long before the jobs because they know that the skills are valuable, in-demand and worth money even today. A drywaller still charges the same amount of money — just is available a little sooner, my car’s oil change is still the same $29, the programming services in the US are still commanding VERY high $$, despite a billion programmers in India, Russia, China, Phillipines and more coding for <$10/hr. Work is still being demanded and business owners are making more than employees.
A common piece of advice for budding entrepreneurs at colleges is — just do it. Think of what a startup needs – idea, caffeine, computer, time. What does it not have – employees, money, fancy digs, nice cars. Now think of what a college student has – ideas, caffeine, computer, time — with no access to employees, money, fancy homes or cars. As a student, you already have the trappings of a startup – leverage them!
So what can you do while shlepping between classes –
a) register your business – others will do it for you for as little as $139 per corporation. Go to your state’s secretary of state’s website and lookup other companies public filings for startup. Get your ideas, create your document and run it by a lawyer. Barter services for the lawyer or pay for his time. Register your business because the act formalizes the business in your head
b) Know what you know well. Practice your elevator statement (one you can recite to a potential in 30 seconds or less) and forget about all other marketing statements. Then WRITE DOWN what you DON’T know and don’t try to do what you don’t know.
c) get 3 customers and work for free if you have to. To quote Steve Ballmer from 15 yrs ago – DELIGHT THEM. Their references are worth their weight in GOLD.
d) ask these 5 for a reference customer and work for this customer for full price. Delight them. Ask for a reference. Repeat until you can afford marketing and sales.
e) Hire!
—Tej Dhawan
It is hard to ignore the stellar successes of business launched at/during college by people like Gates, Dell, Zuckerberg, et. al. We know that like these successes, there exist failures of many businesses. But are those successes and failures any different than those achieved in a job? The risk of failure at this stage is worth the chances of success.
Many students are looking to start a life after poverty, one where they buy their new car, a house, get married and have babies, immediately launching themselves into years of loans and servitude. A car and a house are liabilities and babies require a steady paycheck to pay for diapers and health insurance. How about utilizing your skills in living in poverty to not just earn money, but rather CREATE money? When you live the life of a startup, making a product with little or no resources, selling it to fulfill an unmet need, you can create something real, of value and learn critical life and business lessons at the same time.
Each job you create has a multiplier effect — you earn money from your work and off the work of others who choose to work with you.
Surely, the desire to go get a job is steeped in needing to make payments on the student loan that will start requiring monthly payments soon after graduation. Make a short term compromise — work for someone else just enough to pay for rent on an apartment, gas for the car, payment on that loan and invest the remainder of your time in creating your product. You already know how to live on 3 hours of sleep a night — find a way to bill the remainder to those who need your services. Your skills may be in drywall finish, programming, taxes, accounting, retail, auto repair, gun maintenance, brewing beer, valuation of antiques, writing, teaching, and more — all skills that can earn you 20 bucks an hour as an employee or 75 an hour as an independent business owner.
Parents, Grandparents, aunts and uncles will tell you that the risk isn’t worth it and a job is the ultimate reward — BULL! Ever hear of LIFO principles — they apply to jobs too. Last hired is first laid off with little remorse. The jobs of your parents and grandparents went poof in the last economic downturn along with a large portion of their 401ks and more. Rightfully, many businesses disappeared too, but the business owners are returning long before the jobs because they know that the skills are valuable, in-demand and worth money even today. A drywaller still charges the same amount of money — just is available a little sooner, my car’s oil change is still the same $29, the programming services in the US are still commanding VERY high $$, despite a billion programmers in India, Russia, China, Phillipines and more coding for <$10/hr. Work is still being demanded and business owners are making more than employees.
A common piece of advice for budding entrepreneurs at colleges is — just do it. Think of what a startup needs – idea, caffeine, computer, time. What does it not have – employees, money, fancy digs, nice cars. Now think of what a college student has – ideas, caffeine, computer, time — with no access to employees, money, fancy homes or cars. As a student, you already have the trappings of a startup – leverage them!
So what can you do while shlepping between classes –
a) register your business – others will do it for you for as little as $139 per corporation. Go to your state’s secretary of state’s website and lookup other companies public filings for startup. Get your ideas, create your document and run it by a lawyer. Barter services for the lawyer or pay for his time. Register your business because the act formalizes the business in your head
b) Know what you know well. Practice your elevator statement (one you can recite to a potential in 30 seconds or less) and forget about all other marketing statements. Then WRITE DOWN what you DON’T know and don’t try to do what you don’t know.
c) get 3 customers and work for free if you have to. To quote Steve Ballmer from 15 yrs ago – DELIGHT THEM. Their references are worth their weight in GOLD.
d) ask these 5 for a reference customer and work for this customer for full price. Delight them. Ask for a reference. Repeat until you can afford marketing and sales.
e) Hire!
—Tej Dhawan