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Wednesday, January 25, 2012

Now You See it, Now you Do Not!


One of the most difficult of topics to discuss is the demise of your startup.  There is nothing to say in advance or after it happens to make you feel any better.  No words exist that will take away the sting of the failure and you will relive aspects of the process the rest of your life.  Many serial entrepreneurs have lived through at least one failure and  some, more than one.  There are a few that have not experienced it and if lucky never will.

The purpose of this article is to alert you that many startups just do not make it.  The reasons are wide-ranging and sometimes just strange. Sometimes, you cannot prepare in advance.  When possible, planning an orderly shutdown is preferable over hitting the wall at 100 miles per hour!  At least in an orderly shutdown, you have a chance to manage creditors, staff, and operations to protect as many as possible and as much of the assets as possible. 

The following is a short list of reasons for demise: 1) Product failures, 2) Commercial failures, 3) Development failures, 4) Management failures, 5) Financial failures, and 6) other.  Experienced executives can sometimes manage these events and turn a business around.  The less seasoned professionals may face more challenges than experience allows for effective management.  Many times, it does not matter how good the manager is, the company will be doomed. 

As an example, I ran into a friend a few weeks back.  This person is a great manager. He was developing a company for a VC group.  After much planning and having a deal done for the next financing, he received a call saying the fund was not going to go through the deal.  The news came about a week before the business would run out of funds.  There were no other prospects for investment and the time was too short.  My last discussion with the friend was along the lines that he would be closing the company in about 5 days!

In the biotechnology space, clinical trials are required to demonstrate effectiveness of a product and gain FDA approval.  Two Phase III trials are generally required to demonstrate safety and effectiveness of the product.  Many early stage biotechnologies have experienced break of the code and analysis of the Phase III data to find their product did not work.  This typically makes all investors run for the hills!  If the company is not well capitalized, it will be gone in days. This has taken place numerous times and it is not something you can plan for.  Companies having received in excess of $300MM have failed over night for just this type of event.

The point of this article is to alert you that FAILURE happens.  You can learn from it, you may be able to manage it, but more often than not, the company disappears quickly.  Just be aware that the streets of “Startup Land” are not paved with “Gold”. You will put in long hard hours and experience many great things, but sometimes the magic catches up to you and poof, “Now you see it, Now you don’t”!



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Tuesday, January 24, 2012

Answer the Question


One of the first things you are likely to encounter when interacting with others is the question and answer interactions.  Typical conversations with friends, interactions with staff or supervisors, sales & marketing, business partnering discussions, raising capital and most every other kind of interaction has a Q & A component.  Listen to candidates in debates.  They get questions and have to answer. 

You will find many different approaches to answering questions.  Some people provide an extensive amount of information, some brief terse answers, others are vague, and some highly specific.  Usually, the person asking the question has a limited attention span and really has an interest in hearing the answer to the question asked.  They may have asked a specific question to get to a point in the conversation that is further in the discussion.

So what is the problem?  Most people are guilty of not being specific in their response at times.    For example, you may have heard a response to a question you asked that took more than 5 minutes to give. You wanted to be polite and not interrupt so you allowed the person to continue talking.  Yet, the person was answering a different question or at least not specifically answering your question.  This gets rather annoying if it occurs frequently.

One way to deal with the issue is thinking ahead about what you want to say when answering.  Perhaps you need to provide a significant amount of detail or you want to clarify how you came up with the answer.  Maybe you are unknowingly being defensive in your response.  Your thinking about the question and your intended response allows you to put the answer in a better form. 

One thing I learned (the hard way) is to give the short version of the answer first.  Make a short specific answer the first thing out of your mouth.  Then add whatever detail or explanations wish to provide.  This way the listener can turn off if they really did not want to listen and be satisfied you gave them the answer.  (It may not be polite, but it happens.)

In short, when you get a question, give a short specific answer first & make sure the initial response is specific and clear. Then add whatever else you want to say about the topic.  People will follow you much better and you won’t lose them as easily in the discussion.
 

You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Monday, January 23, 2012

You Just Made the Sale, Now SHUT UP!


Pardon the language, but the title says a lot.  It sometimes takes a very long time to convince a buyer to buy.  This is the case whether the buyer is:

·        someone purchasing a retail product,

·        a possible business transaction like partnering or M&A

·        providing financing in the form of debt or equity

·        or most anything else.

It is so easy to continue to press the point without paying attention to what is taking place.  However, there is benefit in taking time to listen and stopping.  The best way to describe this is by elaborating on a deal that was in progress many years ago.

A company was courting two businesses to gain assistance in evaluating a product.  The company was seeking services and testing on behalf of both entities.  One was a government facility the other was commercial.  After tense discussions with both, the company had decided that it would rather have the commercial entity as a partner.  However, the in house discussions reviewed possibilities of doing business with either.  In the case of the commercial business, the company desired to have a partnership were the commercial business would provide testing and some cash to the company.  As a fallback, the company was willing to pay for testing at the government facility in a different type of deal.  This was the FALLBACK, not the primary desire.  Now that you have an idea of the thinking in the company look at what actually transpired.

The company scheduled a meeting with the commercial business and several of the senior team traveled to attend the meeting.  It was clear there was serious interest from the commercial business and a partnership was in the making.  The meeting to close the transaction lasted for a few hours.  Plans covered the next few year strategy, the funds to be given to the company by the commercial company, and the testing the commercial company would perform at their expense. 

The deal took shape and management was ready to close.  Now for the big finish:

VP:                                                      when do you think we can start the first tests?”

Commercial Company:                     in next few weeks. We will finalize the deal documents first.”

VP:                                                      “can we move it any quicker?”

               Commercial Company:                     maybe, but why?”

VP:                                                      we have lined up a different facility to do the work, if you cannot.”

Commercial Company:                     “You are going to pay someone to do this and we are paying you?”

Well you can guess what happened.  That deal died right there and then.  The whole discussion fell apart and the relationship ended.  It was a good thing the VP asking the questions was traveling back by a different route; otherwise, a different fatality would have occurred.

The point:  Once you make the sale, close and SHUT UP.  Be careful of what you say because you can kill the deal.   Don’t over sell and don’t go into things that are not needed!



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Friday, January 6, 2012

What Are You Talking About?


Have you ever spent 20 – 30 minutes listening to someone and really have no idea what the person was talking about? You heard them, but the presentation was not clear to you!  The problem is a trap that plagues early stage entrepreneurs.  They tend to forget that the listener may not have the history, background, interest, or other attributes to allow them to follow the discussion.  I have been in a number of pitch meetings where a scientist will talk for 30 minutes and my first question is, “What is your product?”   The scientist spent so much time describing all the science, the product definition was missing.

Better planning and thought will ensure you address the issue before it becomes a problem.   A few simple considerations:

1.      At the very start, make introductions and ask for background information for the people in the room.



2.      Slant your presentation to the lowest level person in the room.  This may mean you provide more background information than usual, but it will help you not loose people during the pitch delivery.



3.      Ask how much time you have.  Stick to the limit unless the listeners extend the limit.



4.      Organize your talk and provide the first and last slide telling the listeners what you key points are in the pitch.



5.      Define your product up front.  Later, describe the product again including any required detail that helps the least knowledgeable person understand the product.  Please, do not leave listeners with the nagging question of what your business is planning to sell.



6.      Put places in the pitch to stop and ask if people have questions.  Sometimes, it is better to clear the issues up earlier.



7.      Make the number of slides a few less than the number of minutes allotted to speak.  15 slides in 20 minutes may be good, 30 slides in 20 minutes may be a movie!



8.      Know your business and the market place COMPLETELY, before you schedule the meeting.  You will get questions and want to make a good showing.  The knowledge will also show through in your presentation and follow on questions.



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Thursday, January 5, 2012

It Is Not a Fit


What did that investor mean “it is not a fit?”  Why did he not see how wonderful our company is?  Just a few questions you might have after hearing the famous words.  They come from investors, potential partners, friends, family, and YOU.

Think about what this means in simple terms.  (By the way, all of these examples are real life ones)

1.      You give pajamas to a family member. You went to the trouble to buy the largest size made to make sure they fit.  The family member comes back and says they are too small and I do not like flannel.  OK the size and material were all wrong.  “Not a fit!”



2.      You have a jar of M&Ms with all colors.  Your friend eats all of the M&Ms but leaves the blue ones; what is up with that?  The friend says he does not like blue!  “Not a fit!”



3.      You are investing in stocks.  You want a diverse investment of 5 stocks one in each of 5 sectors.  You have one from the following groups so far: financial, discretionary, utility, & energy.  Someone shows you a second financial stock.  You need a technology stock to round out the portfolio.   The second financial is, “Not a fit!”



4.      You approach a VC.  The VC will invest in 6 companies this year.  They already have two companies they hold investments with technology related to yours from previous year’s investments. They determined which technologies they have interest in for this year last December.   You may have great technology, but your company is, “Not a fit!”



5.      You are talking to big pharma about partnering your drug.  They have 5 related drugs in their pipeline which you are not aware of.  Your drug is “Not a fit!”



6.      Your technology, business concept, and/or management are not something that is attractive to an investor.  No particular reason, they just do not get excited about it. You got it, “Not a fit!”

I could go on about this concept, but hope you are getting where the discussion is leading.  Every part of life has the potential to not be a fit with the here and now of what is taking place.  This includes things like eating M&Ms all the way finding the right business relationship with a partner. 

Your job is to evaluate as much as possible the landscape and help show the fit to the investor, partner or other entity.  This is all part of your planning which must take place before engaging in discussions or negotiations.  It is hard to sell a product to someone that already has 5 of them and is not happy with the product at all.  You are better off selling something they need.  You may have to show them they need it, but that is easier if they do not have it already.

Summary:  Selling and marketing is more than what you do at the retail level.  In startups, it is what you do to find funds and to get business partnerships. It is possible to make a square peg fit in a round hole if you try hard enough.  I took back the PJs and got a different brand, and I am the one that finishes the blue M&Ms that are left (I cannot tell the difference anyway).



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Wednesday, January 4, 2012

Your First Action Is Not Raising Capital


More times than I recall, entrepreneurs make contact and the first topic is how they can get funding.  The same goes for some institutions.  In fact, I even got someone on Twitter send me note indicating that they were seeking an Angel Investor.  This makes me wonder what these people are thinking.

I expect to walk down the streets of New York, Miami, and San Francisco and get accosted by people wanting money to eat.  These people do not know me. I understand and sympathize with their plight.  They have developed a life style that causes them to need money for food.  They have nothing to sell, no idea of ever speaking to me again, they are willing to hit up the next person going by and are usually looking for a few dollars.  Well, except for the person I see in midtown NYC that always asks for a spare $100 dollar bill.  At least he is enterprising and makes me smile!

When you ask someone for an investment, you are not begging for money like a street urchin!  You are seeking a business relationship that will bring a person into the company.  They may even require a Board seat.  It is beyond me as to why some entrepreneurs assume the process of seeking funding does not require building a relationship or doing the required work to develop their business.   To top it off, some of them are so bad that taking a first meeting is a waste of time.   It only makes things worse when you provide contacts that may be helpful and you get a call months later asking for the info again because you lost it.  That does not make you appear like a viable CEO or a leader.  Why invest with this person?  By the way, a person’s time is an investment too.

Most people worked hard to obtain what money they have.  They are not ATM machines and they have personalities and feelings.  The act of asking for funds or a partnership goes hand in hand with developing a trusting relationship.  Recently, I saw a question in Quora wanting to know why a particular VC would not take a meeting with a tech company; “ How about they were not interested!”  There must be a desire for a financial person to want to invest in what you have.  This comes from learning about you, your company, your technology and seeing how it fits in their investment strategy.  The investor has a desire to increase the value of their fund by strategic investing.  If you are not a fit, it can be for a host of reasons.

Simply because you started a company does not guarantee that you will ever find the funds to run it.  You have to work smart and hard.  Maybe the money will come your way if you do work hard.  As an interesting note, I spoke with a few institutions that want lectures on finding money.  Great thought but it is the last topic to address for a startup, not the first.  The planning, construct of the company, the markets and many other topics should come first.  How can someone ever seriously consider giving funds to a person that has nothing to sell? 

Every university faculty knows how to find grant funding.  This is possible in startups and that even requires a lot of preparation.  When most individuals invest their own funds, they hopefully spend significant time understanding the investment.  Not doing this creates too much risk for that investment.

Summary:  If you just started a company, do your work.  Then approach possible investors.  Why blow your chances with real investors due to complete lack of preparation.  In a sense, it is like the saying, “if you do the crime, you need to do the time.”  Stop thinking people owe you and start thinking I have to work harder every day to do the right things.  If I do, maybe they will invest in me!

 You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Tuesday, January 3, 2012

Are You Looking for Things the Correct Way?


Entrepreneurs want money, intellectual property, staff, space, business intelligence and much more.  Oddly enough, entrepreneurs usually start by asking for the MONEY even if they have not done the background work to get it.  Nothing is easy about your startup, if it was everyone would do it.  This is something you must remember from day one when you decide to take the leap.

I have described many important aspects of building a company.  Networking is critical but you need all of the supporting information or you have nothing to show the people you meet.  Hanging a shingle on the office is not a license to have cash deposits made in your account.  You have to earn it.

Finding people to work with you takes time.  You can pay a recruiter or you can find them on your own.  The possible new hires want so know why they should be in the company and if there is a future there.  You have to sell them on the prospects.

Marketing information is available on the internet, but most likely, you need much more extensive search ability to find what will finalize the data marketing plan.  Your job is to tailor each discussion to meet the needs of the individuals you are pitching.  This could be your legal counsel, accounting firm, prospective investors, or prospective employees.  The market information can help to show how you plan to compete and make money.

A key to all of this is looking in the right places.  A friend once told me “even a blind squirrel can find nuts.” He was saying that finding what you want means sticking to the task.  It becomes easier when you do the background work and organize it properly.  You can find anything you seek.

In short, no one is going to deposit any of the important assets you need in your startup.  You are going to have to work to get it.  Your preparation is critical to increasing your chances for success.  The process is an everyday challenge because you will learn something new each day.  This means changing your pitch to fit.

You are part salesperson, part entrepreneur, part employee, but you must be full time prepared.  Yes a “blind squirrel can find nuts”, but they have years of experience and preparation.   They have learned and honed their skill or they die.  Learning is the same for you and your startup, i.e.  ALWAYS IMPROVE AND DEVELOP YOUR SKILL or your startup will die.
 

You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.

Monday, January 2, 2012

Starting Off the Year: Healthcare with a Twist


It should not be a surprise to you to learn that I work heavily in the healthcare space.  I assist several types of businesses.  Some are startup, some not-for-profit, some make money, and some do not.  The people I work with are terrific.  They did not pay me to say this, but I did choose to work with them because they are terrific.  I met a lot of them at meetings!

I have discussed the importance of networking, knowing your markets, finding financing, and many other topics.  Each year that I manage to get an invitation to the JP Morgan Healthcare conference, I GO!  The reasons are rather simple:

·       Many healthcare companies from all over the world present their companies there; big, small, and not-for-profit.

·       Many investment groups set up off site office and schedule meeting back to back for the week. Others are on the floors and listening to the presentations.

·       The conference invites around 6K people, but large numbers of people with no invitation come to network BIG TIME.  They hang out in the lobby or other venues.

·       Nearly every company my clients want to partner with are there taking meetings to see what technologies are available. Last year alone I met with more than 10 Big Pharma companies.

·       There are at least 3 alternate healthcare conferences going on in other hotels.

·       I always meet new people that fit nearly every aspect of what may be needed in the future.

That is just a short list.  I have other reasons for going and have attended for many years.

You may not be in the healthcare space, but Apple has hosted conferences around the same time in the same city.  Other tech conferences are similar to the ones I attend and are located in nice places to visit. 

The point of this article is that for your New Year Resolution consider attending the most important conference in your field.  Use the meeting to NETWORK, IDENTIFY EMPLOYEES, FIND MONEY AND MEET POTENTIAL PARTNERS.  Get in the habit of seeking out the best places. Just showing up, you may improve your chances of success.



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website  or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar  and on Alltop®.