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Thursday, March 15, 2012

Crossing the Invisible Line


In two previous posts, I wrote about sticking with the startup and having a can do attitude:  Are You Over Your Capabilities?” and “The One Word Entrepreneurs Do Not Say.”  Being aggressive and going after what you want is an extremely important part of making the startup a success.  The same is true for selling product, raising capital and most everything imaginable.  There is the issue of the invisible line that you should be careful not to cross.

I suspect you get emails from time to time promoting products you do not want or advertising services you do not need.  You probably get phone calls from a wide range of people around dinnertime wanting you to donate funds to not-for-profits, many of which use more than 60% just to raise more money.  There is a chance you meet people wanting to network for the sole purpose of you helping them; they never intend to help you.  Maybe you are watching TV and at the most critical point a commercial time comes up or someone in the room wants to engage in a discussion.  Do any of these potential annoyances sound familiar?

In my article on being over ones capabilities, I described the friendly the Blue Bird!  After several months, he is still banging in to the windows trying to gain entrance to take over my home.  He will not make it, but he is starting to get a bit over the top.  His constant attempts cause him to hang outside my house on the porch on tables, chairs, ledges and other places he can rest while trying to break in the house.  Unfortunately, his droppings remain at all locations he uses to rest.  Now in addition to having the constant thumping on the windows, I have a huge mess to clean up.  When does a beautiful bird become a PEST?  He is getting close.

So what do the items above have to do with being an entrepreneur and developing a startup?  In your attempts to get funding, sell product, promote your services, you will be aggressive and continue to go after some of the same people repeatedly.  They have the potential to become annoyed if the approaches are too aggressive or too frequent.  You may select new people but forget they have viewed many other transactions or startups and are getting tired of the constant contacts in the area of your business.  The invisible line I mentioned is the point you become like the Blue Bird., i.e. you become more of a PEST and less of a potential business associate.

It is important that you consider the timing of your approaches, letters, emails, calls and other forms of contacts.  Too frequent and you cross the line.  Too far apart and you will be forgotten.  In your efforts to succeed, crossing that invisible line can get you labeled as a PEST by those very people you need.  They will talk to others: read “Yep, You and Your Startup Are Topics in the Rumor Mill.     

Summary:  I cannot tell you where the line is.  The line is different for each person.  You are warned to be careful about “Crossing the Invisible Line.”
 

You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website ,  photo website, or like ColonialTDC on Facebook.  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, March 13, 2012

Presentation Dynamics


During your tenure as the CEO, you will give presentations extensively.   Presentations are given to potential partners, funding sources, investors, conferences, and most anyone that will listen.  The objective is always to increase value.  You may even have different presentations depending on the listener group and the lengths will vary depending on time requirements.  At some point, public speaking becomes easier and the clarity of your style will improve because of so much practice.
When presenting for business purposes you will likely continue to improve the presentation based on responses and feedback from listeners of prior presentations.  This is rather common and it does help improve the style and clarity.  You will learn to match the time commitments of your listeners and to skip pieces as needed to adjust for changes in scheduling.  Again, this is all great, but there is one thing that can happen over time that you will not notice until you get far enough along in the process.  No one is investing and you are not getting business partnerships.  OUCH! 
Sometimes the presentation can be fantastic, but the listeners see through to the content.  Your pitches likely cover all the key topics:  technology, management, development, and making money.  What the listener is seeing is your data and their gut interpretation.  Perhaps the company it is too early, not in the right space, there is too much risk, the management is not attractive, the listener has no interest in the product area, and other turnoffs.  These are not your fault and most likely changing the presentation will not change the outcomes.
One thing that may help is to make an effort to qualify the audience a bit before going to the meeting.  Make sure those financial investors are interested in your space and have money.  You will be amazed how many will listen but have no funds to invest, or limit their investments to 4 in 1000 or something like that.  You may decide to present, but at least you can set your expectations prior to the meeting.  This can be the same for partnerships.  Companies are always meeting with multiple potential new partners. They are seeking the latest and greatest technology that also fits with their projected pipeline.  Try to determine if your NewCo is a fit and what stage of development the companies will consider a partnership.
The key is to set your expectations properly and to understand the real needs of your audience.  You may even adjust your slides to help fit the group dynamics in order to help them see the fit.  You are selling the business prospects and the management team in your pitch.  As you develop the company, the slides will reflect a greater more substantial data set documenting the company’s development.  In time, this will carry weight in helping get a positive decision from the other side.  However, simply changing the slides may not be enough to capture that investment or deal.  It may be the repeated interactions help the other side recognize you are real and the data is spectacular. 
In short, keep improving your business and do not give up.  Your pitch to capture partners or financing may take multiple attempts with substantial business progress over time to attract interest.  Maybe it will take a demonstration or a proof of concept study.  Data and progress goes a long way to attractiveness to others.
You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website ,  photo website, or like ColonialTDC on Facebook.  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, March 8, 2012

We Are Not in Kansas Anymore


History has always had a major impact on the future and the same is true for the future of startups and entrepreneurs.  Past successes and failures will always be part of the guiding principles for every entrepreneur.  Entrepreneurs review history of businesses and use that information to try to gain advantages in their new company.  There is nothing wrong with using the history to guide your new business ventures, but there is sometimes a complication.  The ability to translate the history to the present and future is not linear.

Over the last 20 years, I have seen countless companies developing a new product line anticipated to be a major improvement on what is currently in development or on the market. The companies go out to raise capital but to the surprise of management, the investor-meetings are few or the investors do not show interest.  One of the underlying issues is that even though the newest and greatest technology is the focus of the NewCo, prior companies with related technologies have burned investors in the area.

I often joke that my scientific career has included research on disease targets that have killed more investors than patients.  Look at a few areas when you get time:  septic shock, blood substitutes, antibiotic peptides are just a few examples.  While the cancer immunology market place is emerging, the score is 950 failures in the clinic with only one approval.  A recent review by a respected group suggests there will be more than 4 approvals of products in the space by 2015.  However, the landscape is filled with investors that have lost funds on technologies in this space. Even the one drug approval that Dendreon (DNDN) achieved has caused disappointments recently due to failure to meet earnings expectations. Similar disappointments occur in most other technology areas; this is not just a biotechnology issue.

In the early 1980s, startups were met with significantly greater funding opportunities.  Why not, it was the new thing and prospects seemed great.  The 1990s drove the technology companies to great valuations and IPOs in this sector were amazing.  2000 showed a downturn that caused many to lose more than 70% of their net worth if they had heavy investments in technology.  The time from 2001-2006 was described by one friend as the nuclear winter of financing; trying to raise capital was horrible!  Many of the venture funds had lost money for their investors.  In one discussion with a major financier of venture funds, I learned they had decided to limit investments.  The changes in investing patterns of this group and many others caused many of the venture groups to rethink their goals; some folded. 

The economy is picking up, but investors are only getting back to their levels of 2007.  Some will never return to their levels of 2000 before the start of the downturn.  So what does this mean for you and your startup? 

·        History is great but make sure you also use your interpretive skills to predict the present and future in a realistic manner.  Otherwise, you may head down a more difficult path than you need to tread!

·        When looking at your product or technology area, keep it simple.  New and improved is great, but if all the prior companies in your space lost funds for investors, you will have a major problem convincing the investor community you will be successful.  Remember, they lost money in this sector.  Your NewCo will have “guilt by association”.

·        Seek great technology, management, and be able to stand-alone.  The more you can separate your business from the crowd and the more exciting & realistic the technology looks, the better your NewCo may look to investors.  Investors love sizzle and excitement in the technology, but they also have become more savvy and discriminating when it comes to making their investments. You may be a serial entrepreneur, but they may view you as a serial killer depending on your prior ventures.

·        Drop the HYPE and SELL REALITY.  They will figure the truth about the business anyway.  Why not show them how they will make money and how you can manage.  Sizzle is important, but investors do not like so much SPIN that they view is as lie; the truth will set you free.  Your image will follow you to each venture beyond the one you are pitching now.

·        When reviewing the history, above all remember:  We Are Not in Kansas Anymore” so make sure you adjust your strategy accordingly.

You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website ,  photo website, or like ColonialTDC on Facebook.  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, March 5, 2012

Try With All Your Might. You Will Never Get It Right!


Agreements are an essential part of business.  In my article, “If It Walks and Quacks Like a Duck, IT MUST BE A DUCK!”, I highlighted the need for mechanisms for resolutions of conflicts stemming from agreement disputes.  Preparing agreements to cover working relationships takes a significant amount of time and energy.  The costs of the legal work can be excessive.  Given the time and cost contributed by the company coupled with high quality legal teams, it is surprising that issues ever come up that are not clear in agreements.   

One of the first things to recognize is that a few years after completing an agreement, the language and/or interpretation may no longer fit the situation.  As soon as a conflict arises, the other side starts to interpret the wording in the agreement differently.  The differing interpretations often come about in an effort so seek an advantage in negotiating new issues.  The back and forth will certainly increase the tensions on both sides.

Keeping notes at the time of contract generation that provide some understanding of the initial intentions may be helpful.  This does not mean the other side will agree that their understanding was the same at the time the contract was completed.  The discussions to resolve the differences can be a problem when the two sides want something very different.  For example, in one case an organization licenses a product to a company.  The organization believes the license covers a narrower scope of uses than the company believes is in the agreement.  The original discussions are long forgotten and maybe the original negotiating individuals are gone. The new situation places the organization in the position of trying to extract more money or license parts of the technology to a different business to increase their revenue potential.  The company does not want to pay more money and believes they have an exclusive.  The conflict places the two on opposing sides and without a mechanism to resolve the issues, the process will only grow worse.

The potential for future conflicts makes it worth significant effort in creating clarity around the language and definitions while drafting of the agreements.  Futuristic thought has a value in considering issues that may arise during the working relationship.  In addition, adding some type of dispute resolution mechanism helps.  Even with a great agreement, but do not expect to predict all issues or circumstances because it is not possible to predict the future.

This brings up the point of this article.  You will never create an agreement that will cover all future issues.  In fact, do not be surprised if the language has a different meaning to the parties a few years later.  This is especially true in conflict situations.  An attorney once stated to me, “I have never written an agreement that meant the same thing to all the parties 5 years later.  I have experienced this issue a few times personally!

In short, “Try With All Your Might, You Will Never Get It Right.”  When developing working relationships, try to keep things on a friendly basis and make sure you have real partners that work with you.  It is much easier to work out problems with people trying to accomplish like goals.  It is also much easier when both sides see a Win-Win relationship.



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website ,  photo website, or like ColonialTDC on Facebook.  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, March 1, 2012

If It Walks and Quacks Like a Duck, IT MUST BE A DUCK!


I am certain that all entrepreneurs will execute confidential agreements with possible business partners or other entities.  The agreements usually say confidential information will not be used for business purposes other than to evaluate a possible business relationship.  They may go a bit further to cover the restricted uses, because it is important for startups and other companies to protect their information.

Strange that signing the agreements does not always translate into one or both parties adhering to the agreement, sometimes intentionally and other unintentionally.   Businesses start-off indicating they want to play fair and that they are interested in Win-Win business relationships.  I have experienced the Win-Win opening dialogue as the case in the numerous conflicts resulting what appeared to be a breach of confidential information.  It always amazes me how attitudes change when one or both parties think they made a new discovery after having seen confidential data under a Confidentiality Agreement. 

Litigation is not usually the best way to resolve the conflict, but I experienced one prior episode that resulted in significant legal expense.  No attempts to resolve the issue by proposing a Win-Win scenario were successful. Writing the CEO of the company and the legal team for the other side continued during the whole confrontation.  The judge could not even force a settlement.  Costs on both sides were huge and largely unproductive to both parties.  It was resolved, but that is a story for a different day.

It is always the possibility that one can come up with a new ideas.  Coming up with a new idea after seeing the other side’s data looks strange to the revealing side.  This remains a concern even if the new idea was created without having seen the confidential data.  Keep in mind that it is nearly impossible to convince the revealing side that the new invention was invented fairly once they provide their confidential data.  Remember the phrase, “if it walks and quacks like a duck, it must be a duck.  Get it!

Developing great business relations takes much more effort than taking a great story.  Both sides must feel that fairness and logic are part of the relationship.  This also means sometimes having to give up more than you may feel is warranted.  Win-Win scenarios are a way to create a stronger alliance and team interaction.  Both sides must believe the other cares and will treat them fairly: even if the misuses or deviations are real or were unintended.

Heading off disputes is important at all stages of an alliance.  Having special individuals to work out the resolutions is one way to be ready to tackle dispute resolutions.  Waiting for problems to resolve themselves or kicking the can down the road only allows tenseness and anger to build.  The emotions only make the problem harder to resolve.  Fix the problem and not the blame but FIX THE PROBLEM SOONER AND FAIRLY.

Why do I bring this topic up today, because it comes up every day, including today.  I suspect you will see the problem a few times in your startup.   A few ideas on steps to take when it happens:

·        Agree in advance how the groups will handle dispute resolution.  This is not always so easy, but worth consideration.  Establish a way to engage in discussion once a problem arises.

·        Try to limit the members to work out a pre-resolution. Have them solicit acceptance from their side.  Large group negotiations are horrible.  

·        Make sure those working on the resolution do their homework before engaging. Try to clarify the issues that cause the dispute and to understand what led to the problem. Sometimes just understanding the other side helps.

·        When possible, try to have everyone be a winner in the dispute.  Maybe they do not win all they wanted, but everyone should feel they have a reasonable and fair resolution.

·        Avoid the bad stuff if possible; Legal action, anger & resentment are just a few.  Remember, teams working together can do far more in shorter periods.  Everyone has a chance to win and make money. 



You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website ,  photo website, or like ColonialTDC on Facebook.  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®.