advocateforentrepreneurs

[advocateforentrepreneurs]

Proof(?) that China will become the world’s dominant nation this century

While my evidence is only anecdotal... it is consistent with what I’ve observed over the last 30 years.... and contrasts sharply with what has been happening in the United States

The anecdote(s):

Earlier this year, I was working with a local venture capital firm (founders are of Chinese heritage), looking at a few deals together.  We were in the process of setting up a meeting with a startup that looked particularly promising (also with founders of Chinese heritage).

Two weeks ago, the VC emailed me that he wanted to postpone our meeting -- “ because most Chinese people (local and overseas) are working on assisting the Wuhan 2019-nCoV outbreak  ... I will connect when this issue settles down”

Ceasing business initiatives to focus on the greater good???? and “Most Chinese people” doing so ?? ... then it struck me -- while likely not literally true, it was an indication of a complete national focus on dealing with an important issue.  Two people in Boston stopping all business activity to provide whatever support they could to people 10,000 miles away.

I’m not sure I can imagine a similar response from U.S. citizens ... we USED to be like that.... right after 9/11;  WPA during the depression; World War II; Apollo mission to the moon...... but we seem to now lack a singularity of purpose.  We are much more like a feuding family than a team with an aligned mission.

Could yesterday’s Super Bowl have been won by a team as “siloed” as the US is today?

HERE’s HOW CHINA SEEMS TO WORK:

and HERE’s HOW THE U.S. SEEMS TO WORK:

My friend’s response to the coronavirus brought back a memory from 1987.  I was asked by a friend to help a young MIT student from China who was looking for introductions to some major firms where I had connections (Digital Equipment, Data General, IBM, etc.).  His reason? The student wanted to educate them on the manufacturing prowess being developed in China.  Almost universally he was told “we’d like to sell stuff to China, but our products are too complex to be made in China”.

The student was frustrated he couldn’t get people to even listen.  He said “Mr. Caruso, you just watch.... our country will become a leader in technology manufacturing.... we are committed to manufacture products with pricing less than you get from Mexico, but do so with the ferocity and commitment shown by the Koreans”.  He said it with a passion that resonates to this day.

He invited me to visit China, to see for myself their growing capability..... but I wasn’t prescient enough to see the value in doing so... 🙁🙁

Here’s the similarity between my two anecdotes: a 22 year old student had completely internalized the mission of his country.... and was doing his part to help them succeed.  How a 22 year old thought he might convince IBM to manufacture in China seemed a stretch... yet observing his passion and commitment, I figured he would somehow succeed.  Similarly, how could two individuals in 2020 think they might have an impact on a potential pandemic?

For years we served as role model for the world.... but there’s lots we can learn from others....

.... and with China showing what 30 years of sustained, focussed priorities can yield, what could America (and the world) look like if we could put the same energy we currently spend throwing stones at each other into accomplishing something for the common good?

Thought for the day:   The achievements of an organization are the result of the combined efforts of each individual.-- Vince Lombardi

2nd Thought for the day:  The best time to plant a tree is 20 years ago.  The second best time is today. --  Chinese Proverb

[advocateforentrepreneurs]

HEALTHCARE’s INFLUENCE ON THE ECONOMY

This post is being updated.... 3 1/2 years after the original post.

We’ve all read about how healthcare represents a growing percentage of our economy, but some anecdotal evidence recently brought this home for me.

I don’t watch much TV, but a few weeks ago I noticed several back to back ads for drugs I had never heard of.  A similar experience when I read my weekly magazines.  I started jotting down the names of every ad for drugs I saw... and in a two week period, wrote down OVER 100.

Not a very scientific survey..... but hits home how pervasive pharmaceutical companies are in our lives.

Here’s my list (which today is over twice as along as 3 years ago... even though I haven’t been diligent in tracking recently)

Drug ads

Abreva

Aczone

Advair

Adulhem

Advate

Advil

Agriflu 

Aimovig

Aleve 

Align

Alka-Seltzer

Allegra

Allergan 

Alli

Amberen

Annovera

Anoro 

Arnica

Aspercreme

Aspirin

Aubagio

Austedo

Avistan 

Belsomra 

Benadryl 

Bevespi

Biktarvy

Biotene 

Bexsero

Botox

Breo 

Breztri

Brilinta 

Bydureon BCise

Cabenuva

Caplyta

CaroSpir

Chantix

Cialis

Claritin

Cochlear

Cologuard

Colon Health

Contrave

CooLief

Cosamin 

Cosentyx

Consequen

Crestor 

Culturell

DayQuill

Delsym 

DexcomG6

Dovato

Ducolax

Dupixent 

Eliquis

Ellipta 

Emgality 

Enbrel 

Entresto 

Entyvio

Epclusa

Esbriet 

Estring

Eucrisa 

Excedrin

ExLax

Eylea

Fanapt

Fasenra

Florastor 

Farxiga 

Fibrizzi

Flexitol

Flonase

Florastor

Fluad

Fluarix

Fluvoxamine

Fluzone

Freestyle Libre

Gardasil9

Genexa

Gilenya 

Harvoni 

Humira 

Ibrance

Ifenprodil

Ilumya

Imfinzi

Impella 

Imvexxy

*inCourage

Ingrezza

Inogen

Inspire

Intrarosa

Invokana

Januvia

Jardiance

Jarro-Dophilus

Juluca 

Kanuma

Kardiamobile

Keytruda

Kesimpta

Kisqali

Kybella 

Kyleena

Latuda

Letrozol

Libre

Lidocaine 

Linzess

Lipitorrli

Liponate

LoLoestrinFe

Lovenox

Lumify

Lynparza

Lyrica

Mavyret

Mayzent

Miralax

Mirena 

Movantik

Mucinex 

Mydayis 

Myrbetriq

Nasacort

Namzaric

Nervive

Neurocrine

Nexium

Nexplanon

Non24

Nucala

Nuedexta

Neulasta 

Neuriva

Nexium

NicoDerm

Neurianz

Nucala 

Nuplazid

Nurtec

NyQuil

Ocrevus

Ocuvite 

Opdivo

Ongentys

Orilissa

Otezla 

Oxbyrta

Ozempic

Paragard 

Paxlovid

Peptiva

phexxi

Piqray

Plavix 

Plenity

Premarin 

PreserVision

Prevacid 

Prevagen 

Prevnar13

Prilosec 

Primatene

Prolia

QBrexz

Octevus

Qulipta

Remicade 

Repatha 

Restasis

Rexulti

Rainbow

Rinvoq

Rybelsus

Salonpas

Saxenda

Sendexulti 

Shingrix

Steglatro

Sublocade

Sunosi

Symbicort

Rhofade

Rinvoq

Rituxan

Robitussin

Ruxolitnib

Rybelsus

Salonpas

Saxenda

Salons

Shringrx

Skyrizi

Spinraza

Spiriva 

Steglatro

Stelara 

Sublocade

Suboxone

Sunosi 

Symbicort 

Systane 

Taltz 

Tamiflu

Tena

Tepezza

Theraworx 

Toujeo 

Trelegy

Tremfya

Tresiba 

Triaminic 

Trintellix 

Trulicity

Truvada 

Tylenol

Ubrelvy 

Unisom

Vagisil

Valium

Valsartan

Vanda

Vascepa

Vazalore

Verzenio

Viagra

Viberzi 

Vicodin

Victoza

Viviscal 

Voltaren

Vraylar 

Vuity

Watchman

Xanax

Xarelto

Xeomin 

Xiaflex

Xeljanz

XGEVA

Xiaflex 

Xiidra

Xolair

Xofluza

Xytiga

Xyzal

Yervoy

Yupelry

Zantac

Zeposia

Zicam

Zona

Zulresso

Zypitamag

Zyrtec

Zzzquil

[advocateforentrepreneurs]

A Way to Get Rid of Non-competes WITHOUT Legislative Action

I won't go into the pro's and cons of non-compete agreements here.

Suffice it to say I'm on the side of "they do more harm than good" (except for a few isolated cases, which I'll describe at the end)....

Recently, the Massachusetts legislature rejected a bill that would have banned the use of non-compete agreements.  Many (most?) early stage technology companies were disappointed.

If you share this disappointment, then let's do something about it.

There is a feeling that a company cannot eliminate non-competes unless their competition eliminates them also - "if I'm the only one who allows employees to work at a competitor, I'll be at a disadvantage" is the line of reasoning.

What if we tried the following: any company that thinks we should eliminate non-competes can alter its employment agreements to say "you are free to work with ANY company, so long as you keep all our trade secrets and confidential information strictly confidential, but you can't work for any competitor that prohibits you from working at a competitive company".  I know... hard to get your head around it... almost sounds like a double negative... .but think about it.. restrict movement to companies that require non-competes.... allow movement among companies that don't require non-competes.

If every startup began to employ this policy, we would have a robust ecosystem of talent.... shared talent that gets better and better with each job change.... Eventually, companies that continued to require non-competes would become isolated... and realize that if they don't join in the idea, they will gradually lose access to the best and brightest.  It won't happen overnight... but the handwriting will be on the wall... exceptional talent ... talent that tends to have choices... will prefer to function in an open ecosystem, where their talent can be deployed where it is of most value.... and shy away from that part of the ecosystem that limits their future flexibility.

I've been noodling on this idea since  non-competes became a topic of interest a while ago.... but the few people I've mentioned it to shrugged with "oh, sounds like an interesting idea"... but never really "got it" enough to show enthusiasm...

Last week, while at a Future Forward event (#futureforward), attended by some of the best and brightest of Greater Boston's entrepreneurial and innovation economy, the topic of non competes was raised.  This time, when I made the suggestion mentioned above, it immediately resonated with a few people... and thanks to @ScottKirsner adding fuel to the fire, conversation apparently continued after I left... with some creative ideas building on the basic concept (Scott said: "I love this idea... it's a bit like jujitsu"... thank God he's never seen me attempt jujitsu :-).

We need people to join the bandwagon.  Let's get organizations like the New England Venture Capital Association (@NewEnglandVC) to get their members to promote the concept with their portfolio companies.... then recruit a like-minded attorney expert at employment law willing to provide the community with a template agreement that helps avoid any potential land mines... and then harness the enthusiasm and will of the startup community.... and we can make non-competes history, without the need to make them "illegal"..... thus helping maintain the momentum of our increasingly robust startup community.

We can even try to engage the Governor.  If he gets behind the idea... uses his bully pulpit to promote it...and does a little arm twisting, maybe the Legislature will get the hint, see the handwriting on the wall....and stop being swayed by the narrow interests of a few big contributors (although, as I've mentioned, I think we can make it happen without their involvement... just becomes cleaner if it is memorialized into law).

Apologies to one of my high school heroes, Ayn Rand, who will likely turn in her grave when she sees this blog post..... but "individualism" can at times be destructive, which those of you who know the "tragedy of the commons" will understand.

Joe

Thought for the day:   If at first, the idea is not absurd, then there is no hope for it. --  Albert Einstein

2nd thought for the day

Thought for the day:  I begin with an idea and then it becomes something else. Pablo Picasso

ps: at the outset, I mentioned some possible exceptions.  I believe that anyone who has a set of skills when entering employment, should be free to use those hard-earned skills anywhere he/she is able ... however, if his/her employer invests significant money and intellectual capital to train the employee in a narrow, specific skill set he/she would otherwise have been incapable of learning were it not for the employer's pre-existing IP, then a case can be made, perhaps subject to additional non-compete compensation, that those unique, proprietary skills, not generally known or available to the outside world, might warrant SOME limitation... but I'll leave this twist to others to think about and work out if necessary.

[advocateforentrepreneurs]

Beware when you think you know it all :-)

I've blogged previously about "knowing your market".... but as I continue to tell war stories to make a point with entrepreneurs, one has come to mind several times the last few months.... so I thought it worthy of memorializing here.

Many years ago, I was in Belarus, coaching a group of entrepreneurs in an intense one week bootcamp.  One particularly passionate and impressive founder excitedly told me about his proposed startup... which was going to make windshield wiper blades and oil filters.

I asked "why did you choose those?"... his answer "because there is a big market".  I politely explained that just because there was a big market for something, didn't necessarily mean it was a good idea to try to start a company doing it.. (if I recall correctly, automobiles and soybeans were two examples I gave).  My advice: stay away from anything that even LOOKS like a commodity.... target a unique niche... differentiate yourself.... but above all, serve a compelling need, not a routine everyday need.

It was the end of the day.  

Fairly confident I had provided him some useful insight, I left to go back to my rented room.

As I stepped outside, it began to rain.

Then occurred a fascinating ballet of cars pulling to the side of the road.. drivers jumping out, and removing something from the trunk of their cars.

I asked my local companion "what's going on?".... 

His reply: "Oh, everybody keeps their windshield wipers locked in the trunk... because they are so hard to come by, they're extremely valuable.... they get stolen if left on the car.  There's extraordinary demand for them."

I guess the "inexperienced, naive entrepreneur" knew a lot more than the experienced one. 

The moral of the story: don't look at the world through YOUR eyes... look at the world through the eyes of your customer/client/prospect/partner.

Thought for the day:  One of the greatest pieces of economic wisdom is to know what you do not know -- John Kenneth Galbraith 

[advocateforentrepreneurs]

Was Steve Jobs a jerk?

I finally got around to reading Walter Isaacson's biography of Steve Jobs.  It reminded me of the public controversy at the time of his death where people commented on Job's personality and management style. As brilliant and successful as he was, he was sometimes characterized as "acting like a jerk". Many posts on this subject debated about whether calling something a "piece of shit" drove people to do better... or whether it was insulting, demeaning, and a sign of Steve being a jerk.  For one example of this, see the TechCrunch article by M.G.Siegler:  http://techcrunch.com/2011/11/18/its-shit/utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Techascrunch+%28TechCrunch%29

In trying to figure where I stand on the subject, I can only go by what I've read (having met him only once.... a five minute conversation where I came away impressed, but intimidated).

My thoughts?  Years ago, when I was CEO of a small company, I remember many meetings where there was heated discussion among the team about product or market direction or priorities, etc., and recall making a point at one such meeting when some people were particularly vocal, while others had retreated into silence - at which point I suggested "we should feel free to call each other assholes, SO LONG AS WE DO IT IN A NON-OFFENSIVE MANNER".

What did I mean by this?... That it's OK for people to object to an idea... that we should encourage heavy and heated debate.... and it was acceptable (mandatory!) to verbalize our thoughts about the idea or design or strategy...... but it was NOT OK (at least not in public) to characterise an individual that way.... 

Lest you think this is merely being "politically correct", those that know me know that speaking one's mind has always been top priority.  NEVER hold back with your opinion... no matter how controversial or insulting the opinion might be... but make sure it's only the OPINION that bothers people.... not the style of presentation.  So it's OK to call something a "piece of shit".... and it's OK to say someone's ideas are stupid... but let your disdain be focussed on the idea, not the person.

Thought for the day:  It's more fun to be a pirate than to join the navy --  Steve Jobs

[advocateforentrepreneurs]

Confirmation that our immigration policy is TOTALLY SCREWED UP

I spent the day yesterday at Northeastern University, serving as a judge for their RISE 2012 program (Research, Innovation and Scholarship Expo).

It was an amazing day

Over 400 poster presentations covering a wide range of disciplines: Physical & Life Sciences, Computer & Information Science, Engineering, Humanities, Arts & Design, Health Sciences, Law, Business and Social Sciences.

My high school hero, Leonardo daVinci, would have been thrilled.

Topics ranged from the esoteric ("High-rate Electrofluidic Directed Assembly of Nanoparticles")... to the practical ("Adapting the multiplex residential building into different sites in metropolis")...to the fascinating ("Development before Darwin").

What began to hit my consciousness about 10% of the way through the session, was the makeup of the students presenting.  Apologies to those many who are ignored, and to those who's names I'm about to use to make a point.  Here are (somewhat) random examples: Xin Wang, Nada Alqadheeb, Tuyatsetseg Badarch, Osso Vahabzadeh, Shalini Purwar... I then looked through the program.  Out of more than 400 presentations, only a few dozen had what I would think of as familiar "American" names.

I began asking the students where they came from (India, China, Estonia, Romania, Colombia, Russia, Korea, Turkey, Iran, Mongolia... and on and on....) .. an amazing example of America's openness to diversity.

But then the blinding realization: where were (are) the native-born Americans?  Have they (we) lost interest in higher education?  ...or are they merely less committed to excellence... or less willing to attempt the difficult? (and some of these topics were stupendously difficult).  I came across a number that I felt could be the basis for a substantial commerical enterprise... unique intellectual property... fascinating concepts.

THE KILLER?: not only weren't most born here; most were not citizens; and EVEN WORSE: many (I can't yet say "most") were sad to say they would be forced to return to their native country by US immigration policies.

A number of prominent people have already suggested we staple a visa or green card to every diploma... I would have gone further:  We should have padlocked the doors to the Cabot Gymnasium (where the session was held), and INSIST these 400 students stay in the US for at least five years.  The richness of experience, the intellectual intensity, and the role models they serve would enhance who we are as a nation.... and more importantly: the economic stimulus they would create by bringing their ideas to reality... could help transform our lethargic economy and our worsening self-esteem.

Immigration policies that make it difficult for such students to come here... and even more difficult for them to stay... represent the stupidest of stupid policies we have as a country.  We are not "saving jobs" by making them leave... we are committing suicide by lowering our national IQ, and exacerbating the unemployment problem by preventing numerous entrepreneurial initiatives that could result from their presence.

Those 400 students represented to me, not a bunch of "foreigners"... but the embodiment of what America is (or should be) all about.  They are, after all, the 21st century version of the pilgrims.... and we should work hard to make sure their names join the list of "American" names.

Thought for the day: Never attribute to malice that which can be adequately explained by stupidity. - Anon

AMENDMENT 5/5/2012: A few people have commented to me that they thought it unreasonable I suggest we require foreign students to stay post-graduation.  I guess it's tough to insert emotional intent into the written word.  I meant to say it would be PREFERABLE to insist they stay rather than insist they leave.  Obviously, the optimum scenario would be to ALLOW them to stay.... ENCOURAGE them to stay.  But given the choice of maintaining the current policies OR insisting they stay as a prerequisite to allowing them the education... I'd choose the latter.

[advocateforentrepreneurs]

KNOW and BELIEVE Your Elevator Pitch, Don't Just Memorize It

Every entrepreneur has heard of the importance of his/her "elevator pitch"... the succinct description of your business you're supposed to have at the ready when a VC says "so, what's your business?".

We do entrepreneurs a disservice by calling it a "pitch".... This should not be thought of as something separate and distinct.... crafted for the sole purpose of raising money... it should an integral part of one's business.

As many entrepreneurs have learned, I'm obsessed with having crisp , concise communications.  If you can't describe the essence of your business simply, how will your prospective customers ever understand what you offer?  How will your team know what they are building?  ... and yes, how will investors know whether they are interested?

A recent experience crystalized this point for me:

An entrepreneur approached me... requesting help getting introduced to a venture fund where I'm an LP.

I asked him for a sentence or two I could use as a "hook". Why should THEY want to talk with him (he had begun the conversation by focussing on why he wanted to meet with them.... I asked him to think about it from their point of view rather than his)

He sent something  .... Rambled with far too much detail without making a point.

I asked that he re-write it.... and try to get to the essence of the message in a sentence or two.

He called me a week later asking what response I had gotten from the VC to his revised message.

I apologized, explaining that I didn't quite remember his earlier request.  He was a bit insulted... reminding me that we had spoken... and he had sent me two different descriptions of his business... and certainly I should remember the conversations.  Again apologizing for my poor memory, I asked him to summarize what he had sent in the email. 

His response: "I'm in the car, I don't have the email with me"

I was blown away!.. If HE didn't remember what he said about his own business, how could he expect me or anyone else to do so?

The lesson?  A "pitch" is not some artificat.... a well done "pitch" is evidence you know where you are going, and why.. and it is impactful enough to be readily remembered by others.

Thought for the day:   You do not really understand something unless you can explain it to your grandmother. -- Albert Einstein

[advocateforentrepreneurs]

Build Big Companies, Not Big Exits

An article in today's Boston Globe by Scott Kirsner entitled "Can Massachusetts Produce the Next Google?" sends a great message.  We are not building big companies, not because we can't, but because we're not trying.  We're all thinking too much about short-term financial gain.  We need more role models where "success" is not a quick flip to make a quick buck, but rather building something with legacy potential....

His article prompted me to dust off an article I had written last year for Mass High Tech, entitled "Build Big Companies, not Big Exits".  Scott and I are beating the same drum (and hopefully entrepreneurs will listen, and alter their aspirations slightly).  

Here's the full text of my earlier article:

In recent years, there has been a lot of talk about how vibrant the environment for technology startups is in Silicon Valley compared to Boston. We hear how “they” have a much more active venture/angel infrastructure and how “they” build great companies, while our startups sell out in their infancy. People in the high-tech community lament that Boston used to be THE center of high technology success — Digital, Data General, Wang and others of a bygone era are frequently mentioned wistfully — but in the last 20 years we have stopped growing major companies… while “home run” successes like Microsoft, Cisco, Google, Amazon, eBay and the like have been limited to the West Coast. In fact, we do have EMC, Analog Devices, Staples, Akamai, Biogen, Boston Scientific and emerging successes like Constant Contact, A123, LogMeIn, ACME Packet, EnerNoc, ZipCar, iRobot and others. We have lots of companies to be proud of, but apparently not as many world-renowned companies as Silicon Valley has created. While much of the Silicon Valley/128 comparison is factually correct (there are more venture capital dollars in Silicon Valley; there are more deals; there have been more IPOs, etc.), the tone of the discussion makes it sound like Boston/128 has failed. I call it the ��Rodney Dangerfield” effect: The Massachusetts technology community just doesn’t get any respect anymore. I’ve been an angel investor for a number of years, and I have heard lots of commentary and seen many shifts in strategy and mindset in the venture capital and angel communities. It is time for another shift. I have a simple solution to the dearth of “home run” successes in Boston. I propose that we eliminate the question “What is your exit strategy?” from all investor interrogations of startups. Instead, let’s concentrate on how one builds a successful business. I’m not sure where the emphasis on exit strategies from the get-go began. It was probably an MBA course that said all business plans must explain how investors will achieve liquidity, or perhaps it was from a period when venture capital funds had a heavy mix of 8-year-old illiquid companies. Somewhere along the line, describing your exit strategy before your company really got started became a must. But think about it: How many successful exit strategies are there?  Go public or sell the company. Are there others?  Here’s the problem. If we aim for an exit from the start, we’re likely to get what we aim for: an exit, often through a sale to another company, perhaps one from the West Coast. On the other hand, if we aim to build great companies, we’re more likely to build the kind of company that does the acquiring.   The metaphor of “exits” is an apt one.  If we’re thinking about exits when driving on a highway, then we slow down each time we approach one, asking “Is this the right one?” However, if we’re driving across the country focused on a goal of, say, seeing the Grand Canyon, we fly by the exits along the way, eager to reach our larger goal.  If we hear reports that the road to the Grand Canyon has developed a lot of potholes, we can turn off along the way. But let’s not have our goal be to turn off along the way. Like all metaphors, this one is not to be taken too literally. There often are companies not designed to go all the way to the Grand Canyon, but if we plan on only driving a few exits, we’ll end up designing a lousy car, one that’s not reliable, not designed to go long distances, and one not capable of high performance. As a longtime angel investor, I’m not insensitive to the need for liquidity.  I just think that focusing too much on liquidity too early on can sell our startups short. Let’s try this for a few years. Maybe we’ll find we stop wistfully talking about the good old days, and start talking about all the great, world-class companies that are growing in Massachusetts — once again. 

Thought for the day:  A rock pile ceases to be a rock pile the moment a single man contemplates it, bearing within him the image of a cathedral. - Antoine de Saint-Exupery

[advocateforentrepreneurs]

Nail It, Then Scale It

I am quite fond of getting to the essence of things... often by "dumbing down" to a simple phrase or metaphor, to make a concept easily understood and communicated.

When I saw the blog by Martin Zwilling @startupPro about the new book Nail It then Scale It: The Entrepreneur's Guide to Creating and Managing Breakthrough Innovation it resonated with me, because it's been a message I've tried to give to entrepreneurs for years, but in a less elegant manner.

I haven't read the book.... but in my simplistic way, I've latched on to the concept implied by the title.  These guys have distilled nicely the essence of bootstrapping, capital efficiency, voice of the customer, and a bunch of other important concepts in one..... and all in five words.

Figure out a business model that works on as few dollars as possible... THEN raise a bunch of money to scale it.  If you raise a bunch of money first, you'll spend it all on "nailing it", and won't have any left to "scale it".

Thought for the day:  Good judgment comes from experience, and experience comes from bad judgment. --  Will Rogers

[advocateforentrepreneurs]

Confirmation we're seeing web bubble 2.0?

There have been a number of indications the last 9 months that things are getting frothy in certain aspects of the startup world.  Some crazy valuations... angels chasing deals and writing checks w/o ever meeting, or in some cases w/o even speaking with the founding team.

I personally have seen some deals in the $100M and $200M valuation range... deals where there has been some traction... some revenue.... but investors seem to be chasing the hot ones without letting valuation get in the way....Although full disclosure: in one of those deals, I do think the valuation will be justified in a few years.

Another more notable indicator arrived in my inbox today.....a raw startup, whose plan shows growth from $0 revenue to $1.4 BILLION in revenue in four years .... with over $250 Million in profit in year four (that's not Gross Profit... that's not EBITDA... that's NET profit over $250 million in year four).... and more interesting.... cumulative losses before they become profitable are only $700K.

While there is some chance I'll be kicking myself for not diving in (I probably would have passed on Twitter, YouTube, Facebook, Groupon and a few more winners), but I have begun doing something I haven't done in a while... passing on deals just because of what I perceive as inflated expectations.... including price.

Entrepreneurs are letting the recent Groupon/Dropbox success affect their expectations.... and in many cases investors are doing the same.

This is one old fart who (hopefully) won't get sucked in.

(by the way, I DID get sucked in in 1999... about six months too late...so I hope the whole movie isn't a re-run... only the trailer....)

Thought for the day: People don't ask for facts in making up their minds. They would rather have one good, soul-satisfying emotion than a dozen facts. -- Robert Keith Leavitt

[advocateforentrepreneurs]

At least ASK an expert before jumping to conclusions

A few years ago, while driving to Maine for a long weekend, I received a call from a woman looking to raise money for her early stage venture. She said she offered a line of luxury cat furniture. "Excuse me?", I asked. "Luxury cat furniture" she repeated.. going on to explain that hers was not ordinary cat furniture, but furniture designed with fashion, style, and comfort in mind. This struck me as so ridiculous that I started to giggle..forcing me to mute my cellphone while she explained her competitive advantages and unique market positioning. I had to pull to the side of the road to regain my composure. As nicely and professionally as I could, all the while biting my lip to keep from laughing, I explained that it was not a market I understood, and I preferred to avoid consumer products as being too alien to my background to take the risk.... and wished her well.

A few weeks later I ran into a friend of mine who used to own a regional chain of pet supply stores, and described for him my humorous encounter with the "cat furniture lady". He went on to explain with enthusiasm how cat furniture was the single highest margin product category he had in his years of retailing pet supplies, and how it represented the most passionate, loyal segment of his customer base.

Boy, didn't I feel like an idiot (a not-infrequent feeling :-). Lesson learned? - at least ASK an expert his/her opinion before jumping to conclusions. Having said this, I am NOT suggesting automatically relying on the "expert", since I have other examples where supposed experts have expressed disdain about a company that was ultimately successful. The larger lesson: get input from experts, let their knowledge temper your judgment, but don't blindly follow their advice.

Thought for the day:   Everybody is ignorant, only on different subjects. -- Will Rogers

[advocateforentrepreneurs]

Dependability, Trust, & Confidence

How do you know you have a dependable team?  When you no longer feel the need (nor even have the inclination) to "check up" on each other.  I view dependability the way a trapeze artist views (and needs) a dependable partner.  When he/she leaps off the trapeze bar and throws her arms back, she KNOWS someone will be there to catch her, without having to look over her shoulder first.  Business teams should have that same characteristic.... you just KNOW your fellow team member will fill his/her part of the assignment.

I have also used a slightly different metaphor to make a similar point: there are some people, who, if on January 1 say they'll meet you at 8:00 AM on March 14th, you just know they'll be there... without need to reconfirm... and there are others who say "I'll meet you at 2:00 PM today", and you half expect them to cancel/not show up/or be late.

Regardless of the metaphor you prefer, if your team does not share the trust and mutual respect implied by these examples, then you should have a frank conversation among yourselves and change the team.

Thought for the day:  Trust is the foundation of all good relationships. -- Brian Koslow

[advocateforentrepreneurs]

Value is what someone will pay

I sometimes come up with metaphors that pop to mind in the moment, but don't become part of my conscious memory. (as you age, you, too, will experience this trait :-). I recently had an entrepreneur tell me how in the six months following his successful fundraising, he frequently recalled my story of the nurseryman selling trees, and how instrumental the metaphor was in getting him over the "hump" of valuation. I didn't remember the conversation, but he said it had served as an important reminder that led to a successful closing. The story?

Earlier in the year he had been having a difficult time raising money. I explained that one of the factors might have been that he was overpricing the deal (no, that's not always the reason for not reaching closure, but I knew what they were asking, and sort of "knew" it would not be where the VC's would end up). His retort: "but we've made SO much progress in the last six months... we're clearly worth more than we were asking when we started raising money".. to which I explained: You're just like the man who owns a nursery.. and has a rare tree for sale for $500. He goes the whole year without selling it, but the following year says "it's taller now... so it's worth $600"... and sure enough, five years later he has the same tree in stock at an asking price of $1,500.. never having sold it. Clearly, while the tree was "worth more" each year, it was never worth what he was asking. Don't be offended if the market doesn't agree with your personal assessment...either wait until the market smartens up... or change how you are positioning the company.... or broaden the scope of your efforts.... or accept the reality that if you want money TODAY, you need to accept what the market is willing to pay TODAY. Don't let emotions get in the way of assessing reality.

Thought for the day: It's better to change your opinion on the basis of information than to change your information on the basis of opinion -- Dr. Mardy Grothe

[advocateforentrepreneurs]

Stretch Your Limits

We used to have a dog... Gretchen...... a wildly enthusiastic puppy with boundless energy and enthusiasm.  Each night, we'd tie her to our wood-burning stove in the kitchen (she wasn't house trained, and we wanted to minimize the "damage" her eager roaming might cause).  Each morning when I came down to the kitchen, she would come bounding toward me, until brought up short by the leash.  It took only a few days for Gretchen to learn that she could only move about five feet from the wood burning stove.  On subsequent mornings, she would jump out of her bed, and sit about 4.5 feet from the stove..... just the amount allowed by her leash.  As Gretchen became house trained, we stopped tying her to the stove.... but kept her bed next to the stove.  Every morning for the next ten years, Gretchen never jumped past her 4.5 foot "fence"...even though she was free to do so.  She knew her limits.... or at least what she THOUGHT were her limits.

I’ve used that story many times to encourage employees to not be bound by historical limits….and have used it with CEO”s to make sure their own early policies and management style didn’t send signals to their employees that there was a leash restricting their potential.

Thought for the day:   Whether you think you can or think you can't - Either way, you're right.-- Henry Ford

[advocateforentrepreneurs]

Life Sucks...

A friend of mine, Clint Battersby, passed away last week.

He was young... at least by my standards (53)... having fought a losing battle with cancer.  We had talked occasionally since his diagnosis... and got together once when he was physically up for it... He had an amazingly philosophical attitude towards his situation.. Always talking about "making the best of it".. and always talking about life's priorities - his wife Maria, his kids Alexandra and Andrew, and how his faith was helping him deal with things.

During my last conversation... a few weeks ago, his tone changed.  When I asked how he was doing, his only comment was "life sucks".

Something for us all to keep in mind when we are feeling stressed.  Whenever we think "life sucks".... compare it with Clint's life this last year... and life looks pretty wonderful.. or at least something we should all appreciate more.

Thought for the day:  Not life, but good life, is to be chiefly valued. --  Socrates

[advocateforentrepreneurs]

Stimulus Benefits, wherefore art thou?

Every potitician I've heard speak the last few years has shouted the mantra of "Jobs, Jobs, Jobs"..

A few years ago the US government spent $1 Trillion dollars to stimulate the US economy, with one of the primary objectives (other than preventing financial meltdown), to stimulate jobs (The American Recovery and Reinvestment Act).

Much has been made of the 3 million jobs created (and/or "not lost".... a term I'm not sure has substance).

WHAT IF, instead, we had invested $1 Million in each of ONE MILLION new companies.... yes, that could have been ONE MILLION new companies.

How many jobs do you think those one million companies would have created... my guess is, at least ten million in the short term... and who knows how many in five years.

Food for thought.

Thought for the day:  A lone amateur built the ark.  The Titanic was built by professionals. -- Unknown

[advocateforentrepreneurs]

BREW - Boston Region Entrepreneurship Week

As year two of BREW approaches, I continue to be asked "how did BREW come about?".... 

Here's an entry I made on the BREW blog last year.... 

"While there is a deep underlying set of factors that led to BREW (my career, interests, philosophy, DNA, etc. :-)…. The seminal moment, like that of many startups, was serendipitous and, perhaps, a trifle mundane.

Bill Warner and I had just agreed to get involved in Jason Cascanis’ Open Angel Forum, and were discussing the next event being in October, with Jason flying in from California to participate.  Bill asked if Jason would be interested in being a mentor for Bill’s unConference...suggesting we could schedule the Open Angel Forum about the same time… and mentioned that Jason might also be interested in seeing the Mass Challenge event occurring several days later.  I chimed in with the idea of trying to schedule a few other events that week….to fill in the gap between the unConference and MassChallenge.

…. I then begin thinking about how much we have in the way of things LIKE Mass Challenge and the unConference….with little recognition even from our own community of the richness of what we have in the area…. I latched onto the idea of “a something” that would be like a “weeklong First Night”… several days of activities, centered around a single theme.

The next day Dharmesh Shah suggested I needed an attention-getting name to promote the idea… and suggested BREW - Boston Region Entrepreneurship Week.

Sounded catchy to me… the thought of October… BREW… Oktoberfest… why not have a beer company come up with an "Entrepreneur’s Brew”...have a party…. Etc.

I started a LinkedIn Group, invited several dozen thought leaders… with a view to brainstorming and soliciting ideas.  50 people signed up.  George McQuilken blogged about it… 100 people signed up. Scott Kirsner blogged about it .... another 100 people signed up… and it began to take on a life of its own…."

The inaugural year was gratifying.  Thanks to some great help from Bobbie Carlton and Christine Sierra, BREW expanded to the whole month of October... almost 100 events... 20% of which were created strictly because of BREW...  things like a great session put on at Harvard Business School by Mike Robertsthat had Staples' founder, Tom Stemberg sharing his war stories with a few hundred entrepreneurs.  

This year things have expanded.  The Commonwealth of Massachusetts is inviting entrepreneurs from overseas to see what we have to offer.... and what is the destination?.... BREW... a series of BREW events that will appeal to (and be an attraction for) entrepreneurs thinking of coming to the United States.  We have over a dozen successful entrepreneurs having 1-1 lunch meetings with aspiring entrepreneurs.  We have VC's holding a series of office hours during BREW..... Entrepreneurs competing for free office furniture, a year's free rent, and more ... (and, as the vegomatic sales guy says... MUCH, MUCH more...... ).

By the way... if you want to become part of BREW, then join the BREW LinkedIn Group, "friend" us on Facebook, come up with some creative ideas for an event between October 12 and October 28... or if you are already planning an event... especially those of you with established organizations... and help us show off what we have.

Thought for the day:  A culture gets what it celebrates. -- Josh Wolfe