How to Convince Other [Potential] Co-founders You Have the Next Big Thing

I regularly visit a site for owners of start-ups where people can post questions and get answers from others who are, or have been, in the same situation as themselves. Often I’ll see a question posted, and realize that the wrong question is being asked. That is, the question itself is valid, but the fact that it’s being asked, or the way in which it is asked, indicates that there is a more fundamental question lurking beneath the surface.

One such question was regarding an idea for a new website. The person asking the question had, at the time of this writing, asked a dozen questions related to his idea and turning into a business, the last of which was focused on the difficulties he was facing in finding a co-founder.

I went back and looked at the previous questions, and realized that there was a more fundamantal problem – he couldn’t explain clearly what his idea was, and how it would make money. He had long treatises on various aspects of his business, but he lacked a 30-second elevator pitch.

To counter that, there’s a site that makes a joke of this: So What Does Your Startup Do? where it randomly generates ideas for new businesses. While some of the ideas are funny, some odd, and others intriguing, the basics of the site is that in one sentence, you should be able to describe what your business is.

Forget the long explanations – only people hooked on your idea will bother reading them. Forget about trying to explain market demographics and complicated affiliate programs, it’s not exciting.

Try it like this:

It’s a gaming site where you can bet against your friends using Vegas-odds, with no house to lose all your money to. (Cash Poker Pools)

I didn’t explain the margins, I didn’t get into details about what happens on the site, or who would use it. I just explained in broad terms what the business is. For someone who really wants to know, I can get into the exact details about the nature of the bets, how the odds work, and where the site gets its revenues from. Most people, though, don’t care about that kind of thing.

If you really want to convince someone you’ve landed on the next big deal, make sure you can say it quickly. When they ply you for more information, make sure you can answer the questions actually asked, which are likely not the same as the ones you hoped they would ask.

Moderation of Disputes Between Parties

A recent question was asked regarding a moderation policy on a user-generated-content site, where two people are in dispute regarding an event. Specifically, the site was devoted to reviewing service providers, and there is a possibility that customers who were dissatisfied with the service they recieved could use the site as a means to, unfactually, lash out at the provider.

A provider had contacted the site requesting a particular review be removed, since it alleged facts which were not actually true. The owners of the site, meanwhile, were trying to keep the site unbiased by leaving all reviews on the site. However, if content provided by users was not accurate to the facts, there was a risk that the provider could claim defamation.

The policy I suggested was that the site avoid the issue by allowing all providers to make a rebuttal comment to any review about themselves, thereby giving them a voice that would be directly attached to a review. Additionally, by doing this, the site removes from itself the responsibility of investigating the truth, something which as the site grows, the owners will be hard-pressed to find time to keep up with. Last, most of what is at stake in such a situation is really a gray area, with the two sides disagreeing about an event, and without having been a party to those events, it would be impossible to know what the reality actually was.

The lesson from here, though, can be carried to anytime mediation or moderation is required between two parties. As the owner of a business, there are times when customers and staff will disagree, when two staff members disagree. If the owner is forced to step in to resolve the differences, they should bear in mind that it is nearly impossible to determine the truth.

As such, the moderation should not aim toward assigning guilt to one party, or restitution toward the other, though this may be part of the outcome. Rather, aim toward moving forward, giving voice to the two sides to that they feel they have been listened to, and that their concerns regarding the future have been addressed.

The Right Time for Dragons’ Den

In a surprising twist on the show, a pair of entrepreneurs presented their business on Dragons’ Den this past week, and shocked all of the dragons with their pitch:

Do you know how many people coming on this show would beg to have your problem?

Jamie Bailey and Trudie Wiseman of C.R. Plastic Products came on the show asking for a million dollar investment, and their valuation was considered to be fair. After all, their business in creating products from recycled plastics was turning $5 million annually in sales, a considerable sum.

The problem, and the reason for their approach to the dragons, was one that could be tracked back to management. As their main line of products are considered to be seasonal – outdoor chairs – their workload as well reflected that. During the summer months, when their product is used, they found themselves unable to keep up with the volume of orders. In the winter months, the lack of orders had their employees voluntarily moving to a four-day work week to keep the company afloat, with portions of the balance coming from personal funds.

This problem is a result of poor management, since a well managed company will use fluctuations in workload and cashflow that are seasonal to the advantage of the company, and build sufficient reserves of either product or cash to cover the slow months.

While some of the money of the investment would go toward retooling their plant to increase their production capabilities, the dragons felt that what was really needed was a better management team that could handle the seasonal flow. As a result, they pushed a harder bargain, askign for 50% of the company for their investment. Trudie and Jamie did not have an issue with the 50% percent, though they did ask for additional funds for that percentage.

While on the show the agreed deal was for 50% for the million dollar investment, once the lawyers and accountants get talking, it’s quite possible the terms will balance out.

However, what this presentation highlights is the entrepreneur who can really benefit from the show. They were prepared, they made a solid presentation of their product and their business, they knew what they needed, and they didn’t set themselves up to be derided. The publicity would help boost sales, which most businesses would consider to be a good thing, and if they get an investment out of the show, then they’ve won yet again.

Business and Lies

A question posed regarding how to discuss the size of your customer base when you have few, if any, customers, generated the following response:

A recent consultant I worked with had a clever way of dealing with this… He claimed his clients were the Department of Defense, and the Homeland Security Department. Think anyone can check up on those references? Hah!

You need to get at least 1 customer who is willing to provide a solid reference before you’re able to deal with a customer like that. As for the the ‘how many’ question, you have no obligation to give them solid numbers… go with vague words like ‘several’ or ‘numerous’.

While the second part of the answer is on the edge of acceptability, the first part has no place in a business that intends to be around for a while. Once the lies start rolling, it becomes difficult to stop. Additionally, at some point in time, one of those lies may rear its ugly head, usually at a most inopportune time.

While a methodology in business centered around acting larger than you currently are has come to be an accepted practice, it does not come at the price of lying. Rather, it is from the perspective of having the right mindset for a larger business, if that’s where you’re trying to reach.

In regards to this specific question, then, the appropriate response would be more along the lines of a “small but enthusiastic client-base” which does not specify size, but does admit that it’s not very large. Having one or two clients who would be willing to give you a strong referral can help reinforce this.

However, when you work with clients, you must act larger than you are. That is, the communications must all be extremely professional, follow a process to ensure that any issues are properly handled, and so on. That is, you must act as though you were a company many times your current size, so that the clients will respect you for where you’re going, not where you are today.

Beware Your Pitch – Dragons’ Den Pitch Ends in Court

A friend forwarded me a link to a recent decision regarding a pitch on Dragons’ Den that resulted in CBC being sued over the airing of the pitch. The judge, in rendering his decision, brought to light some of the issues that some people who appear on the show would be well-advised to pay attention to.

In the suit, the plaintiff claimed that the manner in which he was portrayed on the show was defamatory, and that CBC had breached a contract with him, though the basis for this breach was never specified, one of the reasons for which the case was dismissed.

I remembered the pitch, which aired on January 13, 2010, though I went to check, and could not find the airings of past seasons on their website. In it, the pitch was for the creation of a local currency using poker chips, and the dragons laughed his pitch off the show. The metaphors used were quite colorful, and I can well imagine that being the subject of such derision would not have been a pleasant experience.

The shows, though, are taped in May of the previous year, meaning that 8 months had passed since the incident actually occurred, and perhaps that led the plaintiff into believing that it was all behind him. When the show aired, he was reminded yet again of the ridicule he had faced.

When pitching on Dragons’ Den, entrepreneurs must be aware that the conversation is not being controlled, and that anything can happen. As a result, with the knowledge that the editing crew will be looking for the best entertainment value in the masses of taped pitches to make the final cut, it should come as no surprise that what appears on the show is unlikely to be polite and professional.

Being aware, and in fact planning for this, CBC insists that everyone appearing on the show sign a waiver. This is outlined in the materials sent to each person appearing on the show, along with the intent of CBC in taping the show. That is, CBC is quite open that they will be editing the material heavily for a variety of reasons.

When considering going onto the show, be aware that while you may believe any publicity is good, the way in which your session is edited may result in negative publicity, which is worse than no publicity.

Solo in Business

This past weekend, I spoke at Freelance Camp TO, whose tagline was:

Be in business for yourself, not by yourself.

Perhaps one of the most difficult things for a solo business owner is the fact that while they know a lot about their own business, they have a limited perspective, that is, they are stuck with their own. At times, another perspective can make things easier by seeing opportunities or solutions where they see difficulties and obstacles.

Events such as Freelance Camp provide a recourse for such business owners, giving them the opportunity to meet others in a similar situation. If there was one piece of advice that the organizers of the event should be stressing, it’s the expansion of a professional network over the course of the day.

Yes, each business is different, and has its own set of challenges. Yes, your business doesn’t work the same as the business next door.

However, many of the issues faced by all businesses are really the same, and have the same general approaches for solutions. As an example, I was asked during my presentation on Time Management and Procrastination on a solution to dealing with invoicing, something this audience member did not enjoy doing, though she knew it was necessary for her business.

The answer provided was one of options. She could use a service such as Freshbooks, which would allow her to invoice and collect payments fairly easily. As her business grows, she may look at a full accounting system, such as Quickbooks or Simply Accounting. She can continue to use a home-built solution using Excel.

The point, though, is that other businesses have gone through the same thought process, and come up with each of these solutions. A friend running another business might have been able to make all these suggestions. While I was able to answer this question, I may not be reachable when the next question comes up.

If you’re running a business alone, find one or two other business owners, and arrange to get together on a monthly basis to discuss the challenges you’ve each faced, and some of the solutions you’ve come up with. It may be the best investment of your time you do for your business.

Time Management and Procrastination

This article is based on a presentation I gave at Freelance Camp TO on Sunday, October 3, 2010.

Hi, my name is Elie Kochman, and for the last four years, I’ve been working as a freelancer.

When Rachel asked me to present this session, I was amused. I had, after all, missed the deadline for submitting a proposal for a session. When we couple that with the fact that I was still making revisions to this presentation last night, well, I guess that makes me an expert on procrastination.

Before we proceed into the presentation, I have a question for you:

Why are you here and what are you hoping to gain from this presentation?

To begin, let’s dispose of the misconception that there are some hard and fast rules that can solve a time management problem. There aren’t any in particular to time management. There is one rule, though, and it has nothing to do with time management in particular, but still relevant.

Only you can bring about your own success.

That is, you cannot solve any problem, and time management is one such problem, until you recognize that you are capable of bringing about your own success, and that no one else is likely to do it for you.

Einstein said, and I’ve seen this quoted in a variety of ways:

You cannot solve a problem with the same level of thinking that created it.

The issue of time management is no different. While you can, and likely already have, identified the missed deadlines and the late nights working to finish projects at the last minute, you might not be able to identify why. Procrastination is merely a result of poor time management – it’s not a cause.

Most of you will be familiar with the following statement:

It is human nature to be able to easily identify problems in other people while failing to recognize our own.

As we are notoriously bad at recognizing our own problems, or the causes of our own problems, the solution becomes quite simple. Find someone who can recognize our own failings.

If there’s one thing you take away from Freelance Camp TO, I would suggest that it be a new friend, or group of friends with whom you can share your experiences. Meet with that person on a regular basis and talk about the issues your businesses are facing, and how you’re dealing with them. The best source of ideas and suggestions are often from those people who are going, or have gone, through a similar situation to what you’re facing.

Going back to time management – what types of problems are you looking for? Some of my own that I’ve learned to deal with are a predisposition to spend time playing solitaire when I could be working, and failing to write down important pieces of information.

Both problems were pointed out by someone working in the same office as me. It wasn’t something I didn’t know, but it was something I was subconsciously blocking out.

Who can you turn to that might be able to identify such time-wasters for you?

Okay, so you’ve managed to identify some portions of your day that could be utilized more effectively. What do you do next?

The reality is that you’ll need a change of perspective, as the quote from Einstein implies. In this case, though, I’m more open to taking the approach from a large business:

Just do it!

Nike has it right when they say that there are times when the best course of action is to act. You need the mentality of success, but if you convince yourself that you can succeed, you will find the rest of the suggestions over the next little while not to be solutions per se, but rather tools in your arsenal to help you accomplish what you already know to be possible.

What is it that you’re doing? You’re taking control of your schedule, and you’re starting right now. Not later, when there’s a lull in the work. Not next week, after this emergency project gets sent to the client.

Today. Before you get out of your seat.

Recognize the power of a schedule, and make it work for you.

Big companies spend significant amounts of time and money on management, because people are more effective when they are working with a schedule. A good manager will have their team working effectively by scheduling their time for them.

When you’re working for yourself, there really isn’t anyone to do this for you, so you need to do it for yourself.

Steven Covey, author of Seven Habits of Highly Effective People, describes the progression of time management techniques under the heading of one of the habits. I don’t agree with his list completely, but the first three of the following tips I discovered yesterday as I was reading his book overlap exactly with 3 stages of the progression, though in a different order.

Get a daily planner.

First, if you don’t already have one, go out and invest in a daily agenda. If you use a smart phone, there’s probably an app already on it that can do the job. You need to commit to using it, and the best way to do that is to write EVERYTHING into the agenda.

For each item in the agenda, make sure you put on appropriate reminders. For example, you might enter all your bills from vendors that need to be paid. Set the reminder for a few days before the bills are due so that you don’t miss deadlines because you forgot.

Use to-do lists.

Second, make your schedule for each day in terms of what you are going to accomplish before the end of the day. Balance the need to finish projects to get them out the door against the excitement of working on the next big project.

The way I do this is with a large whiteboard, on which I’ve written a detailed list of things I need to do. Each morning, I spend a few minutes marking which items I’m going to finish today, and over the course of the day, I tick them off. At the end of the day, I erase all the completed tasks, and fill in any new tasks that came up that day.

Prioritize daily.

Schedules change constantly, because what you need to complete changes constantly. Clients come and go, emergencies arise, scope of projects expand and contract. You need to recognize that this means priorities are likewise changing. By combining the previous two tips, you can take control of your priorities by always knowing what you need to do, and when it needs to be done.

Each day, as you set the priorities for that day, remember that you are dealing with both the priorities of the here and now as well as the future. Try to set some time every day for the low priority items, because otherwise they will never get done.

Think tasks, not time.

Here’s where I digress from Covey’s progression. In my experience, I’ve found that thinking about work in terms of tasks makes me much more efficient than when I focus on time. When I decide which tasks to work on today, I think about completing those tasks, not how much time I’m going to spend doing that.

The problem, of course, is that with larger projects, it might not be possible to complete them in a single day. So break them into smaller pieces, and make a deadline for finishing each piece of the project.

Use artificial deadlines to assist scheduling.

An artificial deadline is one created by yourself, over which you have absolute control. Once you’ve set that deadline, though, it needs to be considered as rigid as if a client assigned it.

What this lets you do is to create a to-do list that has many manageable tasks in it, and to schedule each of those accordingly. Your schedule doesn’t look like blocks of time assigned to various tasks, but a list of tasks that you’re going to do on any given day. Some tasks might have specific times assigned to them, such as meetings with clients, but others will only specify what, not how long.

Last, I want to talk about interruptions, or, more specifically, phone calls and emails.

You don’t have to answer right away.

While many people find a ringing phone to be an irritant that cannot be ignored, the truth is, you don’t need to pick up every time. Look at your call display quickly to see if it warrants an immediate pick-up. If you do pick up, change your answer to something like,

Hi, this is Elie. I’m just in the middle of something right now – can I call you back in about 20 minutes when I’m done?

Most people would rather talk to you in 20 minutes and get your undivided attention than have a conversation with someone who just admitted their mind is on something else. The same applies to email. While we’ve been trained to respond quickly to emails, the truth is that most emails are not urgent, and can wait an hour for a response.

What I would suggest, then, is that making phone calls and checking emails become a task you do several times a day, perhaps between all the other items from your to-do list that you’ve chosen to do.

Success breeds success.

What you will discover is that each day you succeed at managing your time will result in making it easier for you to manage your time the next day. By constantly looking both ahead and behind you, you will find that you do, in fact, take control of your schedule. Your success, in short, will make it easier for you to continue to succeed in the future.

Solid Business Wheeled Out of the Den – With an Invitation to Return

When this trio of entrepreneurs entered the Den last week and presented their business, it was more than a little surprising that they did not leave with a deal, despite being one of the best businesses to appear on the show.

Christian Bagg, Michaud Gearneau, and Jeff Adams of Icon Wheelchairs entered the Den asking for $500,000 for 20% of their business, giving themselves a valuation of $2.5 milion. With no sales to back up the valuation, the trio was in for a rough ride.

First, however, they demonstrated their product – an affordable wheelchair that’s fully customizable, and is more comfortable than traditional wheelchairs. As one of the trio is a Para-Olympian, and another is also a wheelchair user, they understood the need for their product, and spent significant amounts of time developing it right.

When questioned about barriers to market that would prevent competion, the three were open in that there really aren’t any. Not really a problem, as long as it’s acknowledged and prepared for. Marketing? They knew how to go about doing that.

What they lacked, though, were sales. They had none, just a prototype. No production lines, but aggressive sales projections.

Therein lay the problem. The valuation was so high that at a $500,000 investment, the equity to match would have cost them the company. When asked about that, they responded about future value, something investors don’t want to hear about. When they put money into a business, it’s at the current value, not a future projected value – even if that projection is accepted to be fair.

All five dragons agreed that the product was good. All five agreed that the valuation was way too high. Some offered their contacts, because they believed in what the trio were doing. The business was asked to return at a later date, when the money and valuation agreed.

The problem, though, is that the business needed the money to get into production, but not in exchange for equity. Without being able to reassess that, there was really no way for the dragons to treat it as a serious business. As a charity, it might have gotten the money, but as the solid business idea that it is, it was over-rated – for the time being.