The Art of the Start/Kawasaki 128-132

132 Trick questions from investors…
Questions/What you should say

What makes you think you’re qualified to run this company?/I’ve done OK so far, getting us to this point. But if it ever becomes necessary, I’ll step aside.

Do you see yourself as the long-term CEO of the organization?/I’ve been focused on getting our stuff to market. I will do whatever is necessary to make this successful—including stepping aside if needed. Here are the logical milestones at which we can make this transition.

Is ownership control of the organization a big issue to you?/No, it’s not. I realize that to make this successful, we need great employees and great investors. They all need to have a significant stake. I will focus on making the pie bigger, not on getting or keeping a big part of the pie.

What do you see as the liquidity path for the organization?/ We know that we have a lot of hard work to do before we can ever dream of liquidity. We’re designing this company to be a large, successful, and independent entity. Right now, our heads are down, and we’re working as hard as we can to do this. An IPO would be a dream outcome—plus these five companies are possible acquires in the future…”

Survival is Not Enough/Godin 203-206

206 Instead of making decisions forever, why not figure out which sort of policies and tactics ought to expire? …new brochure…new to replace it within 18 months. Once you set an expiration date, stick with it.

Intellectual Capital/Stewart 92-93

93 When the CEO says "people are our most important asset," he's speaking of the folks in the upper-right quadrant of our chart: people who know how to serve customers in ways that give the company an edge.

By defining human capital in terms of what people must know to serve customers and benefit themselves

GOOD TO GREAT/COLLINS 60-61

61 Mocker/Gillette...maintained remarkable balance in his life. He did not significantly reduce the amount of time he spent with his family, rarely working evenings or weekends.

This was a man who spend nearly all his waking hours with people who loved him, who loved what they were doing, and who loved one another--at work, at home, in his charitable work wherever.

Weissman/Philip Morris..."Other than my marriage, it was the passionate love affair of my life. I don't think many people would understand what I'm talking about, but I suspect my colleagues would".

The Art of the Start/Kawasaki 124 - 128

128 Top Ten lies that entrepreneurs tell investors

1) Our projection is conservative

2) Gartner (Forester, Jupiter, or Yankee Group) says our market will be $50 Billion in five years. [prove market size. Don’t cite these numbers and expect to impress investors.

3) Boeing is signing our contract next week.

4) Key employees will join us as soon as we get funded. [If you’re going to tell this lie, make sure that these potential employees are locked and loaded and ready to quit.]

5) Several investors are already in due diligence.

6) Proctor & Gamble is too old, big, dumb, and slow to be a threat.

7) Patents make our business defensible. [When talking to investors, the optimal number of times to mention that your technology is patentable is one. Zero is bad because it implies you don’t have anything proprietary. More than one mention means that you’re inexperience and think patents make your business defensible.

8) All we have to do is get 1 percent of the market. […come up with at believable total addressable make figure or catalyze fantasy so the investors can come up with a number himself.

9) We have first-mover advantage

10) We have a world-class, proven team.

Survival is Not Enough/Godin 202-203

203 Evolution doesn’t work this way. As long as there is competition (and there’s always competition), species are evolving, testing new survival and adaptive strategies and trying to find a competitive edge. Over time, those tests (combined with inheritance) can add up to a significant advantage for the species.

A business that’s not facing a life-or-death crisis doesn’t need to slow down. It needs to hurry in a very different way. Hurry to evolve. Hurry to test.

Change is not a spigot to be turned on in an emergency and then sit blissfully turned off the rest of the time. It’s a constant process, a tool for beating the competition.

GOOD TO GREAT/COLLINS 59-60

60 Indeed, one of the crucial elements in taking a company from gtg is somewhat paradoxical. You need executives, on the one hand, who argue and debate--sometimes violently--in pursuit of the best answers, yet, on the other hand, who unify fully behind a decision, regardless of parochial interests.

All of the debates were for the common good of the company, not your own interests

The Art of the Start/Kawasaki 122-124

124 Investors want to weed out the rejects as quickly as possible because they don’t want to waste time, and obvious flaws make it easy to throw out a plan, so you must present a clean slate. Here are the areas in which flaws abound:

Intellectual Property
Capital Structure
Management Team
Stock Offerings
Regulatory Compliance.

Survival is Not Enough/Godin 200-202

202 In a competitive marketplace, there’s no such thing as perfect. By the time you develop perfect, your competition will have changed the landscape so much that your product won’t even be good any more.

Over and over again, Microsoft has demonstrated that shipping a mediocre product but following it up with a much-improved (and evolved) version will always defeat a competitor who’s still busy working on their first version.

If you’re stuck waiting for something to be perfect, it’s very hard to get the feedback you need to make it better.

Intellectual Capital/Stewart 91-92

92 ...3 out of 19 US industrial companies outsource more than half their manufacturing.

By outsourcing, a company is liberated from the need to invest in expertise that isn't proprietary.

...you want to put your money where you will make money. You want to invest to outpace the pack, not just keep up with it.

The alternative to outsourcing is differentiation--finding ways to turn generic knowledge into something your company is uniquely able to exploit, or can exploit in unique ways. Whenever a company advertises itself as selling solutions, it's trying to differentiate high-value commodity knowledge.

GOOD TO GREAT/COLLINS 58-59

59 There is an important corollary to this discipline: When you decide to sell off your problems, don't sell off your best people. This is one of those little secrets of change. If you create a place where the best people always have a seat on the bus, they're more likely to support changes in direction

The Art of the Start/Kawasaki 121-122

122 Traction counts the most because you’ve demonstrated that people are willing to open their wallets, take out money, and put it in your pocket.

Survival is Not Enough/Godin 199-200

200 Start introducing new ideas on a regular schedule.

Microsoft has a great solution. They have two different teams working on operating systems, each releasing new systems every two years.

Intellectual Capital/Stewart 89-91

90 Four quadrants of workforce
Difficult to Replace, Low Value Added------------Informative
Difficult to Replace, High Value Added------------Capitalize
Easy to replace, Low value Added-----------------Automate
Easy To replace, High Value Added---------------Differentiate or Outsource

91 A company's human capital is in the upper-right quadrant, embodied in the people whose talent and experience create the products and services that are the reason customers come to it and not to a competitor. That's an asset. The rest--the other three quadrants--is merely labor cost. (Incidentally, placing yourself on the grid is useful way to evaluate your job security or to analyze whether you would find yourself closer to the upper-right quadrant in a new position in the company or with a different employer.

GOOD TO GREAT/COLLINS 57-58

58 It might take time to know for certain if someone is simply in the wrong seat or whether he needs to get off the bus altogether. Nonetheless, when the gtg leaders knew they had to make a people change, they would act.

Practical Discipline #3: Put your best people on your biggest opportunities, and your biggest problems.

The Art of the Start/Kawasaki 120-121

121 The point is not that the submission process should be a level playing field. The point is to tilt the playing field in your direction by getting an introduction by sources that investors respect.

Current Investors. One of the most valuable services a current investor can provide is to help find additional investors.
Lawyers and Accountants.
Other EntrepreneursProfessors

Survival is Not Enough/Godin 194-199

195 Companies spend far too much time and money worrying about success.

197 Once a company understands the need to zoom, it can start to build tools that increase its ability to adapt to a changing environment.

198 At your next decision-making meeting, bring an egg timer.

199 You can dramatically increase the pace and impact of memetic change by creating artificial markers—call them birth moments. The launch of a new factory or a new web site or a new office is an occasion to implement a whole host of new memes at once.

Someone needs to be pushing these things out the door, because until other people interact with them, you won’t get substantial feedback to help you improve the next one.

If the cost of “launching” a new generation of product or service is quite small, you coworkers are going to be more likely to pull the tripper. And once they get into the habit of launching without stalling, the generations speed up.