The Venture Edge

You’ve launched your new Internet business. Exciting times. Customers like what you’ve done; they’re actually paying you! And then one day you receive a letter asking you to cease and desist because you’re infringing on someone’s patent. You contact the offended party to offer to license their technology, but they refuse. They want to shut you down. 

My colleague and friend Andrea Belz forwarded a link to an article in the LA Times written by Andrea Chang called “Female Tech Entrepreneurs Flourish in L.A.” I thought it was a fitting counterpoint toInc. magazine’s total focus on our male counterparts (see Peter’s post); and for those of you who don’t read the LA Times (which is nearly everyone these days), it may encourage you to give that newspaper another look. 

Today, more than ever, we need to help our young people take charge of their lives and learn how to become financially successful. On Friday I had the pleasure of serving as a judge for Junior Achievement’s sixth annual Student Entrepreneurship Challenge, and in doing so my hope for the future of our young people was renewed. For those of you who aren’t familiar with this organization, it has been around since 1954 and its goal is to “empower young people to own their economic success and stay in school through financial literacy, entrepreneurship, and work readiness programs. 

You had to know it was going to happen because we’ve seen this story a thousand times before. An entrepreneur comes up with a product and makes a business out of it; it’s easily copied so lots more businesses like it start popping up, and eventually it loses its charm, causing profits to drop like a stone.  The Wall Street Journal just reported that the gourmet cupcake market is crashing. To those who invested in these one trick ponies I say, “I’m not feeling your pain.” 

One word I’m definitely getting tired of is pivot.  For those very few of you who have not drunk the Kool-Aid on this term, to pivot means that based on market information you gain from “getting out of the building,” you make a change in direction for your startup—sometimes a radical change in direction, like completely changing your business concept. Given that the term pivot is most commonly associated with basketball, it does seem that we’ve distorted the original meaning of the word a bit. 

It seems that telecommuting—the choice to work from home, your boat, or anywhere else for that matter—is at the forefront of a national debate, largely due to the recent decision by Yahoo CEOMarissa Mayer to require Yahoo’s employees to work from the office. In other words, she wants her team to have a physical presence on the Yahoo campus.

Recently Fortunepublished a typology of hackers, six different types of individuals who represent what hacking seems to be about today—cyber terrorism (I summarize them below). Unlike original hackers from the early days of computing such as John Draper (aka Captain Crunch) and Steve Wozniak, the hacker ethic seems to have disappeared in favor of a growing computer underground that by some measures costs the average company $8.9 million a year in cybercrime.

When did we as a society decide that achieving supernormal success disqualifies a person from inspiring or helping others find their path to success? When did being successful mean that you no longer understand what it’s like to fail? And, most of all, when did we stop respecting others’ right to their opinions and start attacking people personally in mean-spirited ways just because we disagree with them or are envious of them? 

 If we’ve learned anything from the recent bout of Web company implosions following IPOs, it’s that just because you’re a founder doesn’t mean you’ll make a great CEO and going public is not everything it’s cracked up to be.

I just returned from an interesting industry forum at Children’s Hospital, Los Angeles, one of the premiere pediatric and neonatal intensive care facilities in the U.S. I work with the Center forTechnology and Innovation in Pediatrics and, believe me, it's a labor of love. It was exciting to hear from some CEOs, including Tom Thornbury from Neotech, about what they’re doing to solve the problem of using adult devices on babies and children, which, by the way, does not work so well. One of the issues that came up was the new tax on medical devices and the impact it might have on small businesses and on innovation. And it’s a killer.

One of the most successful medical device companies ever, Intuitive Surgical, is THE pioneer in robotic surgery and certainly the most popular machine with surgeons. In fact, the Journal for Healthcare Qualityreports that about 41 percent of hospital websites advertise robotic surgery and the most popular is definitely the da Vinci from Intuitive Surgical. But every pioneer has to face some arrows and Intuitive Surgical (IS) is no exception.

I thought I’d follow up on my recent post about crowdfunding and the SEC [see Crowdfunding: What’s up with the SEC?] and Peter’s post about the Dell Innovators Credit Fund with something about AngelList, which has been in the news recently. 

Can you believe it’s been nearly a year since the President signed the American Jobs Act designed to jumpstart startups by giving entrepreneurs access to money from average citizens in exchange for equity in their companies? Meanwhile, because of the inaction of the SEC, nothing has happened.

 One of the great joys of the holidays is taking stock of where I am and what I need to do to improve in the coming year. I’m not talking about the well-worn New Year’s resolutions we all feel compelled to make—those are always a bust. It’s the chance to clear some space in my life for new opportunities and things I’ve always wanted to do. It’s also a chance to get rid of things that are no longer worth the time. At the New Year, I’m always reminded that time really is the most precious asset we have – how you spend yours says a lot about who you are and what matters to you.

 In 2005, David Choe, a graffiti artist, received stock in lieu of a $60,000 fee from a little company known as Facebook to paint murals on its headquarters’ walls. His shares amounted to .10 to .25 percent ofthe value of the then private company. When Facebook went public in May 2012, his stake was worth about $200 million.  Sounds like taking stock might be the way to go, but this case is the exception not the rule.

Last night was the last session of the start-up class I teach with Scott Lenet and Jon Bassett, DFJ Frontier Fund VCs. It was at once exciting and celebratory, but at the same time sad because we’ll never have this same group of entrepreneurs in the same place at the same time.

 We’re getting to that time of year when students who want to become entrepreneurs are preparing to pitch their businesses for feedback, grades, or maybe even funding. If they’ve done the really hard work it takes to get a start-up in shape, the payoff is exciting. Unfortunately, too many students have done just enough to get by, hoping that their charisma at pitch time will push them over the line. Good luck with that!

 I told myself that I had to take 24 hours before responding to the major event of this week, namely, the election, because I wanted to do some thinking about what it all means for those of us who spend our time in the world of small business and entrepreneurs. So I titled this post “Pivoting on Big Things Takes Guts,” because it’s easy to make changes to small stuff—it’s the big changes with huge impact that take real courage to make.

Peter and I made the decision early on that we didn’t want this blog to be political even in a political season. Our focus is entrepreneurship and business. However, given what’s going on in the campaigns, especially in the last few weeks, I had to weigh in, but in a non-political way. What that means is I won’t make a case for one candidate or the other. What I will make a case for is that voters should be informed before they can vote. If fact, just to be provocative, maybe we should consider a qualifying exam to vote. Let me explain…

I’m not a lawyer, but I can't count how many times I’ve urged entrepreneurs to settle the ownership issues for their start-ups before the venture starts looking like there might be something there. “No worries,” I’mtold. “We’ve worked together on teams at the university, and we really trust each other.” What a joke! “Get the legal stuff settled early,” I warn them, because it’s more difficult when you’re facing the possibility of funding. Do they listen? Not as often as I’d like. 

 Every so often I go on a rant about the negative effects of multitasking (see “Focus! Multitasking can make you stupid”). Well, it now seems that someone has come up with a way to train your brain to focus by counting tomatoes. Yes, I did say tomatoes. Who knew.

I have good friends who may want to dispute the title of this blog because it certainly pops the bubble that is the accelerator craze that I’ve talked about before (see “Accelerators – do the math”), not to mention the research-based view that having VC money signals to others that your venture is likely destined for success. But in this case, my title is backed up by recent research coming out of Harvard Business School. Shikhar Ghosh, a senior lecturer, claims that three-quarters of U.S. venture-backed firms don’t return their investors’ capital.

 I have to say that Sarah Needleman at the Wall Street Journal is fantastic at picking up on trends in the startup world. Recently, in a September 12 article (“Start-Ups Get Snapped Up for Their Talent”), she talked about the latest frenzy in Silicon Valley: buying up talent from struggling start-ups for not very much money, at least in Silicon Valley terms.

The new academic year got off to a roaring start and once again I’m surrounded by people who flaunt their ability to multitask as if it’s a badge of honor. Students are the loudest at broadcasting the fact that in any particular moment they can be suring the Web while taking notes and also engaged in the discussion we’ve having in the classroom. Right! They proudly proclaim the fact that they juggle three to four activities or tasks simultaneously as if that made them super intelligent. Actually it sadly signals that I’m surrounded by people who are on the path to becoming stupid.

 As an entrepreneur I thought it might be fun to watch the video that Peter recently posted and see if I fit the mold.  I’m sure many of you have done that by now. As someone who has spent her career in entrepreneurship, I have to say that I don’t agree with some of what the Minute MBA had to say, although the way they said it was pretty clever.

A while back, like many others, I wrote about the explosion of accelerators in Southern California and, in fact, around the globe. Accelerators have gone from a cottage industry to a feeding frenzy.  But some interesting stats have come out that paint a pretty sobering picture for the entrepreneurs who pin their hopes on them and for the investors who invest in them.  

 I’m always exploring the small business section of the Wall Street Journal because it’s interesting to see how these little engines of growth are doing in these very slow-growth times.  According to Anjali Athavaley’srecent article “Into Working Outside,” many businesses are giving up trying to support expensive overhead in New York and are moving outside to free public space and setting up shop, especially startups.  All kinds of businesses from Web developers to designers, and even service providers, can now be found at picnic tables near the Manhattan Bridge (the intersection of Water and Pearl for those who know the city) taking advantage of free Wi-Fi and decent summer weather.

What prompted what will be one of my rare rants was an email I received this morning touting several new books on women and entrepreneurship, which came on the heels of debate in the media about the appointment of Marissa Mayer as the new CEO of struggling search engine Yahoo, the ongoing questions about why there aren’t more women in C-level positions in Fortune 500 companies or on their boards of directors, and arguments about why women-owned firms tend to be smaller than men-owned ones.  Being a woman who has worked in male-dominated fields her entire adult career I had to weigh in, even if it might stir up some women who don’t necessarily agree with me.

 Many entrepreneurs breathed a sign of relief when Congress reauthorized the Small Business Innovation Research program for five years.  If only it were that simple.  One of the most important ways that small businesses get money to develop their new technologies is through the SBIR grant program (Small Business Innovation Research).  “S” does stand for small in this case.  But apparently the SMALL Business Administration, which considers a small company anything under 500 employees, is proposing new rules that seem to violate the intent of the law producing unintended consequences (how often have we seen that recently).

Can paradise and productivity exist in the same place?  I'm not so sure, but then maybe it's not a good idea anyway.   I have been vacationing on the Big Island (Hawaii) for over a week now, barely checking email and not working on any of the projects I'm involved in.  As much as is humanly possible, I've been off the grid.

Don’t you just love hype cycles, aka bubbles?  I do because they’re so predictable and yet we all go along for the ride.  What's funny is that you can see them coming, but they’re hard to resist because the excitement that surrounds them is so palpable.  Even if we realize that  all bubbles eventually pop, we still seem taken by surprise when they do.  The dot com boom, energy, and the rise in housing prices (I’ll admit that one lasted a long time) to name a few recent ones that made a lot of people rich and then took it all away.

I thought it might be nice to follow up on Peter’s last two posts about entrepreneurship in the Philippines with a global view of startup activity based on the wonderful work of my friends and colleagues at GEM, the Global Entrepreneurship Monitor.  We often think of the United States as the entrepreneurship leader, but like anyone who takes a leadership position for granted, we need to pay attention to who’s nipping at our heels and challenging that position. America’s leadership position is definitely not what it used to be.  

You would have to be a hermit not to have noticed one of the fastest growing industries around – the business accelerator.  If you Google “business accelerator,” you’ll get about 16 million results.  16 million!!!  It seems that every city worth its salt is launching an accelerator in hopes of generating new businesses and job growth in their community.  So does it work and should you find an accelerator for your new venture?  

I love entrepreneurs who do big things, who want to change the world, who know that if they fail, they’ll fail big---but if they win, they will have made a difference.  I’ve written about Elon Musk (“SpaceX: A big win for an emerging industry”) who, with SpaceX and Tesla Motors, is definitely taking on monumental, but exciting challenges.  Today I want to tell you about a unique entrepreneur who also has a big vision that will giveyou faith that real innovation—the hard stuff—is alive and well.  

As someone who sees dozens of new businesses in the conception stage each week, I’m struck by how many never address the risk inherent in relying on a dominant player’s platform for the heart of their business.  I’m speaking specifically of Google and Facebook.  Whether you’re relying on Google search for customer acquisition or AdWords for revenue, or on Facebook for customer acquisition and marketing, you have put your business at the mercy of the competitive whims of these companies, most often without a backup plan.

 Tomorrow is graduation at the University of Southern California and probably hundreds of other schools around the country.  And while it should be a time of hope, a sense of accomplishment, and the excitement of getting a job and becoming independent, this year’s class is facing a tough job market—fewer jobs and more people competing for them. How prepared is this group of graduates to meet the challenges that await them?  Sadly, and with apologies to the students who took their time in school seriously, I’m concerned that too many are not equipped with the skills they need for success.

 I hear lots of ideas for new businesses; most of them are simply me-too’s or not compelling enough to get serious about.  So I’m wondering what I would have said if an entrepreneur had called me to discuss hisplan to mine for metals and minerals on asteroids.  My first question would have been “and you’re doing this with whom?”

 How many of you have that little unfolding box icon on all your devices?  Actually, well over 50 million of you who store more than a billion files on Dropbox servers every three days.  It’s a simple but powerful concept.  Founders Drew Houston and Arash Ferdowsi, former MIT students, want to solve the digital storage and file sharing problem for you, no matter which operating system or device you happen to be using—the value proposition is that simple. But making it simple for the customer takes a lot of work on the back end.

 You may be surprised to learn that the world’s 4 billion poor are the largest untapped consumer market on the planet with more buying power than any other group.  Would you also be surprised to learn that of the $1.1 billion people who live on less than $1 a day, more than 70% are small farmers on rural, often unproductive land in Sub Saharan Africa?  But here’s the shocker.  The cost to get one family out of poverty forever is only $300!  For one person, only $60!  And here’s the best part of all, none of them are looking for a handout; they simply want the opportunity to make money.

 I've just returned from one of my favorite conferences, the National Collegiate Inventors and Innovators (NCIIA) conference in San Francisco, and I have to say that inventing to solve real world problems is alive and well.  Bravo to all the teams represented from universities around the U.S. who found ways to solve compelling problems both here and in emerging economies.

After another week of hearing budding entrepreneurs claim that they either have no competition or that their competition is essentially irrelevant, I felt compelled to speak out.  Whether you’re a scientist with the temporary monopoly of patents you want to commercialize or the latest Internet startup in a niche that no one else has targeted, let me say this loud and clear—you DO have competition.

 Imagine having thousands of workers available on demand to do the work you don’t have time or employees to do.  Crowdsourcing has been around for a number of years and comes in many different forms: seeking solutions to problems, carrying out digital tasks, or hiring freelance workers, to name a few.  Several years ago, my business partner and I used a crowdsourcing site to design and build the look and feel for our nonprofit’s website.  It actually worked quite well, and we were happy with the result.  Best of all, we saved a lot of money and got it done within the budget we had.  Today, crowdsourcing has grown to include all sorts of business tasks that can be accomplished and delivered in digital form.  But is crowdsourcing all that it’s touted to be?

 I have the good fortune to work with very talented engineers who have lots of cool ideas and the ability to solve really tough problems.  My job is to help them turn those terrific solutions into products that have commercial value, and that’s not easy.  Why?  Because a lot of these highly trained engineers are better at solutions than they are at problems, which is a problem in itself because entrepreneurship and new product development are all about having a deep understanding of problems.

 Recently I wrote about how tired I was of everyone bashing private equity firms. The bashing was accelerated by the fact that Republican presidential candidate Mitt Romney had been a principal in Bain Capital, a private equity firm.  Now that the media and Mr. Romney’s opponents have moved on to greener pastures, for the moment, I’m reading about states that are removing the tax credits for angel investors in qualified investments because startups don’t create enough jobs.  Is there anyone out there in government who understands how startups work?

Last week I saw one of the best pitches for funding I’ve ever seen.  Irene Rhodes is the founder/CEO of Consumer Fire Products, which provides proprietary wildfire protection systems that are, quite simply, amazing.  I’ve known her for some time.  She’s a USC alum, and I’ve had the pleasure of giving her advice along the way as she developed the business.  So what did she do last week to hit it out of the park?  

Lately, private equity has gotten a lot more attention than it probably wants.  That’s because most of the attention has been negative as reporters and political pundits have gone all out to expose their lack of knowledge on the subject including confusing venture capital with private equity and making wildly unsubstantiated claims about the “vulture” nature of private equity.

Start your engines all those of you who have hopes of becoming top-level domain name registrars, which seems to be the opportunity du jour. On Thursday this week ICANN, the non-profit organization that oversees the Internet domain name world so that it’s not completely chaotic, will begin accepting applications to manage a whole new set of top-level domains that could include just about any word.  Think dot-electronics or dot-snowboardingsafaris.   Opening up a vast array of potential top-level domains will no doubt have the domain-name speculators out in force.

I keep looking for the pundits to come out in force to predict what 2012 is going to look like for business owners. Most seem to be hiding because I’m not seeing a lot of insightful predictions. Maybe they just don't have any idea.   Now, I do not put myself in the “pundit” class by any stretch and I don’t have any special insights into what might happen this year, but as a business owner I sure have been thinking about what to expect in the next 12 months.   

 Imagine spending a ton of time and resources coming up with the name for your company or your product only to discover that someone else owns it.  Or they own the trademark while you own the domain name.  Or what about this?  You’re a famous entrepreneur and someone in another country legally changes their name to yours.

Many entrepreneurs launch their businesses with a board of directors that consists of the founding team and perhaps the first investor while they rely heavily on board of advisors for everyday guidance and to open doors. There's a good reason for this approach: it's easier and less costly to find people willing to be on an advisory board because advisors don't have the legal liability associated with being on a board of directors. Most potential directors will not serve unless you carry directors' and officers' (D&O) liability insurance to indemnify them, and the expense of this insurance is often prohibitive for a startup. However, I would argue that establishing corporate governance early in the life of a startup will often enhance the quality of the company as it grows.   

I want to follow up on Peter’s great post about Google and its march toward brand dilution with its latest venture, a local/online delivery service.  You might scratch your head and ask why are they doing this, but remember this is the same company that is also developing autonomous, self-driving cars so that we can devote our full attention to its search engine while we’re on the road. 

I have been missing in action for the past week and a half and Peter stepped in to fill the void.  My father passed away last week after a long life of 93 years (WWII vet at Guadalcanal) and a valiant battle for the past two years to overcome a disease that cut short his wish to live to 100.  I hope you’ll permit me a bit of a deviation from my normal posts because going through this transition with my father was a life-changing experience that taught me some key lessons that anyone can and should apply in their lives, especially in these times. 

Well, that title is going to irk some people.  Actually, I can’t claim to have thought it up. No, a friend in Madrid sent a link to this post on a Chilean site called PilarSordo, written by Armando Fuentes Aguirre.  The title is “Hay Gente Pobre, Pero Tan Pobre, que lo Único Que Tiene es…Dinero,” which translates to there are poor people, but so poor, that the only thing they have is money. Given that in 2006 Chile had the highest GDP per capital in Latin America and the Global Competitiveness Report for 2009-2010 ranked the country at 30^th most competitive in the world, I thought Aguirre might have something interesting to say.

It’s not often I get to write about proposed legislation that will actually make something less regulated, particularly when it comes to the SEC.  But, it’s true.  Read on. 

Only two days left until Groupon begins trading on the NASDAQ exchange under the symbol GRPN. Their highly anticipated (and often panned) IPO, scheduled for November 4, is important to investment banks that have another 14 ventures in the wings waiting to launch their IPOs.  If Groupon fares well, companies like Zynga and Angie’s List will head out with some confidence.  On the other hand, given all the negatives around Groupon in the past few months, there are no guarantees that this party will last beyond the initial bump.

Peter hit the nail on the head when he said in his recent post that saying you’re sorry just doesn’t cut it. With third quarter results just out, Netflix lost 810,000 customers  between Q2 and Q3. That’s a lot of customers. Although the company increased its revenues this quarter, the full effects of customer loss won’t be seen until the 4^th quarter.   If that weren’t bad enough, the company has also lost billions in shareholder wealth with the stock down to about $93/share. So what is the real reason CEO Reid Hasting’s plan to split the company failed so miserably? It may be because either he never really understood his customers or he was simply arrogant enough to think that he knew best what they wanted. Either way he sacrificed the long-term value of loyal customers for for bad execution of a questionable plan.

Ok, the title of this blog is a bit cheesy given that this year’s Wall Street Journal Technology Innovation Awards gave the gold medal to a company that produces heart cells by the billions. I couldn’t resist. The annualawards seek out “breakthrough” technological achievements in everything from medicine to consumer electronics.

Today I received VC Steve Blank’s blog post, Nokia as “He Who Must Not Be Named” and the Helsinki Spring, and I encourage you to read it. I usually avoid writing about political issues as much as possible because that’s not the purpose of our site; but sometimes it’s unavoidable, especially when it affects the future of entrepreneurship in the U.S.

I never switched my allegiance to Apple, although I wouldn’t part with my iPad2 for anything. No, I’m one of those business people still rooted in PCs and Windows. But I have to say…the death of Steve Jobs yesterday was a huge loss to innovation. He was the first of the technology icons that I’ve admired to leave this world, so it felt a bit like a personal loss as well. I’m sure Apple will feel his absence for a long time to come. As difficult as it was for Tim Cook to replace Steve Jobs in the hearts and minds of Apple fans while he was alive, it has to be even more difficult trying to step into the shoes of a legend.

I’m working with a fresh crop of aspiring entrepreneurs who are pie-in-the-sky optimistic about their ventures becoming the “next big thing.” I love their optimism because today it seems thatoptimism is in short supply in the general public, but not among these can-do entrepreneurs. They’re absolutely certain that they can compete successfully in a very crowded marketplace. And they absolutely can, but only if they adopt a contrarian point of view.

Peter and I are big on entrepreneurs designing businesses that can withstand unpredictable events—those events that mathematician and philosopher Nassim Taleb dubbed Black Swans. This week the European Organization for Nuclear Research, better known as CERN, reported on an experiment that "...could have a potentially great impact” on science—what an understatement!

From time to time I’ve been talking about some of the critical skills that entrepreneurs must have to be successful no matter what industry you’re in or what the state of the economy is. Last week I talked about decision making and your emotional intelligence. Today I want to talk about storytelling. First off, let me assure you that I’m not referring to tall tales or big fish stories when I say storytelling.No, absolutely not! In this case, storytelling is your ability to convey a compelling narrative about yourself, your business, your product, and your customer.

One of the important skills that entrepreneurs must develop is effective decision making. This is true not only because some of the decisions they are called upon to make could affect their business insignificant ways, but also because entrepreneurs make hundreds of decisions throughout any given day and usually those decisions are made quickly, almost instinctively. Any one of those decisions could negatively affect the business.

Although entrepreneurship in its essence is about startup—creating an opportunity and gathering the resources to make that opportunity a successful enterprise—it really is also a way of life. Once you’ve been bitten by the excitement of discovering an opportunity and creating and designing a new business, it’s hard not to see opportunity everywhere you look. But despite the fact that I’ve clearly drunk the entrepreneurial Kool-aid, I do recognize that this lifestyle is not for everyone. 

It’s very hard to get the business model right at startup. Even if you’ve done all the things we’ve talked about in previous posts, there are no guarantees that things won’t change once you have an operating business. The business environment is fluid (and that’s being kind) so chances are you’ll be operating a few months and something will shift

Now there’s a negative way to start a post! But I believe in facing the facts; let me explain. Today on the news shows, people were talking about how the government has to incentivize entrepreneurs tostart businesses and businesses in general to hire more people. Some talking head on CNN actually proposed that if the government would simply subsidize one new job for every small business and that business had to keep the person for 5 years, we could get rid of unemployment. Sounds pretty simple, doesn’t it?

 Imagine you’re a VC who is finally seeing the light at the end of a long tunnel. The company you have put your heart and soul into, not to mention millions of investment dollars, is about to go public.Can you picture the excitement—after all, the press has called your company a long-awaited IPO—it’s going to be big!  Really big. But wait...the market doesn’t seem to be cooperating—betting on a great opening day is looking like trying to shoot a pheasant in the dark (without night vision goggles - I know I'm going to hear from one of my South Dakota friends that this is totally possible). You see your fellow IPOers Pandora Inc. and Linkedin being pummeled by stock sell-offs. And it’s not just Internet companies getting slammed. InvenSense, which makes motion sensors for consumer electronics, hit the pause button on its IPO, according to a Wall Street Journal article.

I can’t tell you how many times I’ve seen this happen—you identify a customer need and come up with a fantastic solution only to discover that the customer is not doing their part by buying it. And our saga of the TaTa Nano is an example of that, but here’s another.

The biggest  markets for new products and services today lie in developing countries, and these countries represent more than 80 percent of the world's population.  Asia, Africa, and Latin Americaoffer a wealth of new opportunity to entrepreneurs who can help customers become more productive and create wealth.  But to take advantage of these opportunities entrepreneurs need to leave their developed world perspective behind and look at these markets from a local perspective. 

 I don't often write about books I'm reading, which is surprising since I'm an avid reader and a lifelong learner.  Actually, I'm finding that my love of books (the real physical kind as well as the Kindle/iPad kind) is not shared by a lot of people any more.  Each semester I post my favorite business books for students, and when I ask if they have read any of the books, only a couple hands go up. A sign of the times, I suppose, and a reflection of the reality that today people want information in sound bytes.   Their loss... 

It looks like the most sweeping reform of our patent system since 1952 is going to happen. The House and Senate have both passed similar versions of the bill and it now goes to reconciliation. If you’re an inventor or your small business files for patents, you should have been paying attention because not everyone is happy about the changes being made. 

Although it appears that I did two posts in the last two weeks (less than I normally do), I will admit now that I set those up in advance to post while I have been off the grid in French Polynesia.  This was a well-earned vacation (and much needed), but if you're like me 

 I just finished making a Kiva loan to a woman entrepreneur in Peru. If you’re not familiar with Kiva, it’s a micro lending program founded in 2005 to “connect people through lending to alleviate poverty.”  You can go on Kiva’s site and search for an entrepreneur anywhere in the world who needs a loan, and you can be the lender for as little as $25. When the entrepreneur pays back the loan (and all of my entrepreneurs have paid theirs back), you can relend it. And that’s the essence of micro lending. I’ve been doing Kiva loans for the past 4 years, but it was after the debt crisis here in the U.S. that I wondered if it might be a model that would work here. Clearly others were thinking the same thing because today there are several sites offering “peer-to-peer” lending. 

One of the great moments in education for those of us who teach comes long after the student leaves the classroom, sometimes years later when out of the blue the student contacts you to thank you for what he learned in your class and how he used it to further his career.

 I’m beginning to think that everyone believes that incubators hold the secret to entrepreneurial success. When you look at all the incubators that have launched in the past few years, you wouldcertainly get that impression. Some highly respected people have launched such programs as yCombinator, TechStars, Plug and Play, and IdeaLab, to name just a few. Their goal? To claim the next great startup, whether it be an Internet company, an energy company, or a retail play.

 On May 18, I posted a blog about the Mobile News Incubator program at the USC Annenberg School for Communication & Journalism. In short, 17 students in teams were dropped into four news organizations—The Associated Press, Variety, KCRW-FM, and La Opinión, the largest Spanish newspaper in the U.S. Their mission? To develop new mobile app products that would revolutionize journalism. I’m happy to say that every team succeeded beyond all expectations.

I recently received an email from a high school student with strong entrepreneurial interests who asked me whether I thought it was worthwhile to go to college to study entrepreneurship. Sam even sent me a list of about three dozen books he had read related to entrepreneurship (several of them were mine, so he already knows how to get someone’s attentionJ) As a professor at a university known for entrepreneurship, you would think this would be an easy question for me to answer. Well, it’s not, because in a world where pretty much all the information you might need is readily available online, and since many universities have been successful with online courses, students are questioning how they should spend their time, not to mention their money.

Today I’ll meet 17 students who hope to invent the future of news in just 9 days. Sound impossible? Maybe, but then considering how fast we've seen change come to the global journalismbusiness--it's now powered by millions of citizen journalists through blogs, Facebook, and YouTube-- 9 days is almost an eternity! 

 I just finished the semester at USC and for one of my graduate courses, Technology Commercialization, the students, who come from science, engineering, fine arts, psychology, and business have to write a reflection paper of about 4,500 words on the insights they gained and novel connections they made across all the various activities and requirements of the course. This is always an eye-opening experience for me because I learned long ago that students are frequently learning things you never thought you were teaching!

Ever since the cartoon series “The Jetsons” became a household world in the 1980s, we’ve fantasized about owning a car that could fly. And, if you live in a megalopolis like Southern California, you dream about rising above it all. Former UC Davis professor Paul Moller, who designed his first helicopter at the age of 15, went beyond the dream stage and has spent his life developing a flying car. After more than 20 years of development, his company, Moller International, has produced “the first and only feasible, personally affordable, personal vertical takeoff and landing (VTOL) vehicle the world has ever seen.” On his website, Moller has the following anonymous quote about new technology:

 Part III of the Facebook Trilogy.  Now that yet another Facebook “founder” wannabe has come out of the woodwork to claim his riches, it’s time to take stock of the lessons that entrepreneurs should learn from the evolving story of the founding of Facebook. First-time entrepreneurs make a lot of mistakes, and Mark Zuckerberg is no exception, so let’s see what we can take away from the ongoing claims against Facebook.

Are you feeling the pressure to put your business on Facebook? It’s not surprising because lots of small businesses (and large) are rushing to plant a stake in Facebook territory, hoping to take advantage of referrals by people who “friend" their company. It makes sense, because we all know that referrals bring us the best and most loyal customers, those lifelong relationships. Some marketers are claiming that Facebook will become the next great e-commerce platform.   But before you set up your retail business on Facebook and expect an onslaught of sales, you need to consider whether it will really help you or not.

 Back in February Peter wrote about the new program, Startup America [“Ready. Set. Startup America!], that promises to support a variety of entrepreneurship programs and kick start more new businesses. Looks likethe UK is getting on board with their own version—Startup Britain. 

Coming to you from Washington DC where I was speaking at the National Collegiate Inventors and Innovators Alliance (NCIIA) annual conference.  Tonight was the highlightofthe conference, March Madness for the Mind.  Oops, can't call it that any more because the NCAA decided they didn't like the juxtaposition with their annual collegiate basketball tournament.  So this year, it's actually called Open Minds, a characteristic the NCAA can't claim.

I often get asked about how to quickly assess a new venture idea so you don't waste time and money on something that has little or no chance of succeeding.  To be sure, some ideas don't immediately suggest a problem; in fact, they may look like real winners until you dig a bit deeper and uncover the fatal flaw.   

Recently I’ve been talking with my students about patents and the issue of prior art. For those unfamiliar with patent law, prior art refers to the body of knowledge that precedes the invention thatyou’re seeking to patent. The key point here is that you can be prevented from obtaining a patent if your invention is based on something already in existence—“known or used by others..or patented or described in a printed publication.” [Title 35, USC, Section 102] But enough of the legal stuff. What’s interesting about prior art is that sometimes a work of fiction can prevent you from getting a patent if it reveals the secret sauce behind the invention.

If you attend or speak at a lot of conferences in your industry like I do, after a while they all start to look the same—a bunch of people giving speeches, attendees skipping out on sessions tocatch up on work, and everyone eating like they've never seen food before. If you're looking for something different and you want to hang out with the movers and shakers of the world, the most exciting conference of all is TED, the brainchild of Chris Anderson.  It's the place to be every spring in Long Beach, CA, but you’d be hard pressed to get an invitation because it sells out a year in advance at $6,000 a ticket. For that you get to schmooze with the likes of Bill Gates and Gen. Stanley McChrystal and become part of an exclusive network of TEDsters.

We sometimes have this impression that anything worth paying attention to when it comes to technology is taking place in the U.S. and maybe the Pacific Rim.  But this past week a huge event took place in Barcelona—Mobile World Live, and it featured a stellar list of keynotes including Google’s Chairman/CEO Eric Schmidt, Microsoft’s CEO, Steve Ballmer, and Dick Costolo, CEO of Twitter, to name just a few. 

As someone who spends her life around entrepreneurs, I've seen every type imaginable.  But sometimes you have the pleasure of getting to know an entrepreneur whotakes creative thinking to the max and does more than simply start a business--he changes an industry. Such a person is Tom Grasty, who is probably one of the finest graduate students I've ever had the pleasure of working with. Tom comes out of the field of journalism, an industry that is struggling to adapt to the onslaught of citizen journalists who tweet, blog, and YouTube their way alongside (and often in front of) the mainstream press.  But even Tom and his partner Nonny de la Pena couldn't have predicted that their collaborative video editing platform, Stroome, would play a role in the revolution taking place in Egypt.

it's amazing to me how often our government takes a perfectly good idea--for example, Startup America, designed  to encourage innovation--and then screws it up big time.  At the same time the White House was announcing all the programs that Peter talked about in his recent post (Ready. Set. Startup America), it also announced a new way for business to fast-track the paten tprocess. On the surface, this seems like a good thing, but look a little closer. 

I first met Richard Rosenblatt, the co-founder and CEO of a now very public new media company, back in 2006, after he had successfully sold MySpace to News Corp’s Rupert Murdochand had just started a long-tail phenomenon called Demand Media.  I had asked him to participate in an Internet forum I was hosting at USC.  People at that event were clearly watching and listening carefully to this serial entrepreneur because he is that rare person who not only envisions a business, but an entire industry, and then makes it happen. If you're familiar with his history, he has done it multiple times, but that’s another story. He became a friend (and, of course, he's a fellow Trojan), and last week I had the good fortune and excitement of being an investor in the company’s highly successful IPO on the New York Stock Exchange.  In the short space of about 4.5 years, Demand Media (DMD) has grown to more than 600 employees with locations in North America and Europe and is now worth as much or more than the New York Times on the public market.

This morning I once again had the pleasure of hosting the Tech Coast Angels at the university. They are the largest angel investor organization in the U.S. (see an earlier blog post “Finding investors is art, not science.” ). At their screenings, they typically have 2-3 entrepreneurs pitch their ventures. Today’s pitches were some of the best I’ve seen in a while in terms of the actual businesses they were pitching; but, I have to say that “death by PowerPoint” is alive and well with entrepreneurs. I certainly have been doing my best to get my students to shed the text-laden slides that force you to choose between what the presenter is saying and trying to read the rendition of War and Peace that is on the slide.Unfortunately, not enough of you have been listening. 

I am sitting here in sunny, but very cold, Hilton Head, SC and thinking about small businesses.  Not just because I'm here to speak at a the USASBE conference on small business and entrepreneurship, but also because I just finished driving around the island with a colleague and had the opportunity to talk to some small business owners.  The primary economic driver in Hilton Head is tourism, so lots of retail and food services. Like many other small business people, these entrepreneurs have really taken advantage of the Internet to promote what they have to offer because it's where we all look for information and because relative to other forms of promotion, it's inexpensive.  Makes sense because with just an iPhone and a car, we were able to find the best that Hilton Head has to offer.  However, some people still believe that direct mail (what we all refer to affectionately as junk mail) is the most effective marketing channel--and Paul Vogel, the U.S. Postal Service's chief marketing person, is one of those people.

I have to admit that when I saw the promotional material for How They Did It: Billion Dollar Insights from the Heart of America, I thought, “OK, another book about entrepreneurs and lessons learned. Fortunately, I didn’t simply dismiss this book with all the other promotions that hit my inbox and instead decided to call the author. 

 I’m not a big believer in New Year’s Resolutions—probably because they tend to survive about two weeks after they’re made, if that. That’s not to say that the fundamental idea of promising yourself to do better in some aspect of your life is not a good thing—it is—but rather than set yourself up for failure, maybe New Year’s Eve is a good time to reflect on 2010, but, more importantly, to visualize 2011. Let me explain.

Maybe you've always wanted to invest in a startup (what could be more exciting!) but never had the ability to risk a large chunk of cash.  Well, Santa Claus has just found an opportunity for you.  Joel Shulman, (aka Santa) an entrepreneurship professor at Babson College in Massachusetts (a great school, by the way), is about to officially launch a mutual fund of publicly traded companies that have entrepreneurial characteristics. It's called the EntrepreneurShares Global Fund and it's comprised of more than 200 companies, 60% of which are U.S. companies and the remaining are from China, Canada, the U.K. and Hong Kong. Shulman soft launched the fund November 11, attracting about $10 million in institutional investors as well as a number of his most loyal students. 

You may have noticed that in a lot of companies today, dressing for success is not something you’re seeing quite as often as you used to. Maybe it’s a sign of the times—more and more companies run by wunderkinds in jeans and t-shirts like Mark Zuckerberg, Time Person of the Year.  Looking like you’re too busy to think about showering or shaving seems to be in fashion. Or maybe it’s just laziness. After all, it takes a lot more effort to dress up for work and look your best, and besides, that might signal that you’re trying too hard and haven’t really made it.

 As I'm in the midst of doing grades to end the semester, I have to laugh at all the people who think it's a walk in the park to teach at a university.  Tonight when I should be putting up my Christmas tree, I'm trying to calculate the grades for my two classes this semester.  Normally I wouldn't complain about something that's simply part of the job, but, sorry, grading is something I really dislike.

It’s always amazing to me that no matter how many times I advise entrepreneurs about their pitches to VCs and angels, they still think they have a better approach and that approach invariably includes spending far too much time on the problem and solution and practically no time on market validation and business model. It doesn’t matter whether the entrepreneur is given 5 minutes or 15 minutes, it happens time and time again, so much so, that by the second slide I can usually predict where things are going, and it’s not pretty.  

Those of us who blog have our favorites that we follow, but that doesn't mean that we always agree with what they have to say.  Such is the case with one of my favorite blogs, Steve Blank, who is a VC, author, and adjunct professor at Stanford.  The day before Thanksgiving he posted "When It's Darkest Men See the Stars."  This was meant as a there-is-still-a-lot-to-be-grateful-for-despite-everything-that's-wrong-in-the-world type of post appropriate for Thanksgiving when we're supposed to give thanks for everything we have.  And it was actually a very positive post, claiming that "we're standing at the beginning of the entrepreneurial revolution." I'm sorry, Steve, but the entrepreneurial revolution has been going on since the 1980s when it became the word du jour in the U.S.

In just two days it will be Black Friday. In the retail biz the day after Thanksgiving has traditionally been the biggest shopping day of the year, the point at which retailers make up for any sluggish sales they’ve experienced over the year. Unfortunately, with the economy still in the doldrums, retailers of all sizes are having to discount heavily to drive store traffic. After all, it’s much easier to cuddle up with your laptop in front of a cozy fire and buy all your holiday gifts with a few clicks on Cyber Monday. That’s a pretty tough barrier for small businesses to overcome.

Every entrepreneur dreams about reaching the promised land, as they say, making it big by being acquired or successfully executing an IPO. But, not so fast--I can list on more than two hands the number of entrepreneurs who were dissatisfied with the result. If they weren’t singing “ Is That All There Is,” (an old Peggy Lee song from 1969, recently revived by Christina Aguilera) they were wondering when the precise moment was that they realized, “Hey, I don’t own this company anymore.”

Listening to the political pundits, you might think that big business is the instrument of evil, responsible for all society’s ills. If we could only regulate, tax, and generally punish big business for the harm it has inflicted on everyone, all would be well. Those same feelings aren’t transferred to small businesses. No, small businesses, bless their little hearts, are virtuous, positive reflections of American ingenuity and hard work, and they create all the jobs worth counting. If only it were that simple. 

If you're like most people, you're probably  tired of the negative campaign ads and slogans, the partisan sniping, and debates that don't answer the question, how are we going to fix this mess?  I know I am.  If you only depended on ads and the sound bytes you get in the news, you'd have a hard time trying to decide whom to trust.  I'm not going to presume to tell you how to vote in this election.  What I am going to say is that it's very important that you study the issues and vote as an informed voter. If you don't vote, you really have given up your right to complain about what you get after the election.

Inventors are interesting people. I know a few and what I can say for sure is they’re definitely not normal. I don’t mean that in a bad way—if they were normal, they wouldn’t have the vision to connect things that don’t generally go together to come up with something new. Let’s face it, they see the world very differently from most of us, and it’s for that reason that not all the inventions they come up with are practical. In fact, the vast majority of inventions that receive patents never make it to the market at all.  

It’s a common phenomenon that even the savviest entrepreneurs can stumble trying to take their businesses to the next level. Marco Giannini wasn’t new to entrepreneurship and he wasn’t new to failure. While an MBA student at the University of Southern California (and one of my students I'm proud to say), he launched Clear Day, a natural beverage company designed to take advantage of consumers’ desire for functional beverages. That business failed in 2003 from a lack of customer validation and too much money spent on product development. Not one to dwell on failure, Giannini decided to take his experience in functional beverages into a new area. His childhood dog had suffered from arthritis and hip dysplasia, so he began to study how supplements in dog treats might help dogs live happier lives. After finding a manufacturer to produce his first product—Happy Hips—Giannini began driving all around California visiting pet store owners to get them to try his product. He also handed out samples at sporting events. When a customer wrote to him to tell him that her aging dog was now able to walk normally after two years of Dogswell treats, he knew he had a hit.

Sometimes what appears to be good news isn't.  And we've been seeing a lot of that lately. The Small Business Administration (SBA) recently reported on its fiscal year 2010, which ended September 30.  Despite much press about how small business is unable to get credit, the SBA loan approvals rose by 30% over those in 2009.  The agency approved about 54,826 small business loans to the tune of $16.84 billion.  Of course, that's still below the pre-recessionary levels of about $20 billion; still, it's not chump change.  

 On Monday, President Obama signed into law the Small Business Jobs Act, hailed by the administration as “a great victory for America’s entrepreneurs,” and promising to provide loans that small businesses have been waiting for. The administration is hoping that doling out taxpayer money to the tune of $30 billion to community banks will ensure that small businesses will rush to increase their debt and grow their businesses, adding new jobs that are desperately needed. But not so fast...unfortunately, this tactic appears to be a solution in search of problem.

 I'm going to deviate from our small business economy posts for one post because I think it will help many of you focus your pitch about your business, whether that's a new business you're designing or one you have up and running.  Last night in my graduate tech feasibility course at USC, my VC in residence, Scott Lenet (DFJ Frontier Fund), brought his partner David Cremin to give the students a lesson in pitching to the needs of the investor.  Needless to say, it was eye-opening for many.

With only a few weeks until a very important mid-term election, Peter and I decided to focus our next several posts on critical political and regulatory issues impacting entrepreneurs and small businesses for the foreseeable future. We’re not going to take political sides but rather deal with the truth—just the facts, folks. Let me start by saying that uncertainty is clearly the word of the day and the entrepreneurs and business owners I talk to around the country are all singing the same tune—no major commitments until we know where things are going. 

There are plenty of articles out there on the biggest mistakes you don't want to make when you start a business.  In fact, I've probably written one or two of them, but at least I can proudly say I actually committed a few of those mistakes so I know for a fact they're mistakes you shouldn't make.  What disappoints me is when a consultant ( an entrepreneur wannabe and professional service provider) who does business plans and financial projections for startups claims to be an expert on the subject and completely misses perhaps two of the biggest reasons new businesses fail.

I just had the opportunity to write for Forbes about what you need to think about if you believe it's time to leave your job in Corporate America.  This is an issue many women have faced as they begin to hit the glass ceiling and are frustrated that their job is not giving them everything it should.   In fact, that's why many women leave the corporate world to start their own businesses.  But surprisingly enough, I heard today from an engineer who said he had learned something from the article as well, claiming " Excellent advice, even for those of us among the weaker sex." 

We live in a dynamic, global marketplace that places a premium on speed and quick returns. Shareholder value is often considered more important than basic human values. Entrepreneurs are under so much pressure to achieve the unachievable and just survive in this environment that it causes stress; and when people suffer stress, they don’t always make wise decisions. That’s when your ethics come into play.

Now before you dismiss the title of this blog as a joke, or worse, the ravings of an idiot, hear me out. It’s an unfortunate fact that many universities and for-profit businesses are perpetuating the myth that entrepreneurs have to create business plans before they start businesses. Potential entrepreneurs are spending up to 200 hours of their valuable time in pursuit of the perfect plan to present at a competition (don’t get me started on business plan competitions – I’ll save that for another post) or pitch to an investor, only to discover that investors are more impressed by a founding team that has gotten the business up and running, even in a minimal way, to prove the concept than they are by a nicely bound document.

Several years ago I wrote about a trend for retail businesses--the kiosk approach to testing a business concept or product. What this entailed was setting up a small shop in the form of a kiosk, generally in mall space, with relatively low overhead, but the ability to directly reach consumers. I also wrote that some landlords found that, rather than sitting on an empty space until a new tenant is found, they could rent the space on a temporary basis so that their cash flow is not interrupted. Well, guess what? In these uncertain and depressed economic times, we’ve seen a real resurgence in these “pop-up” businesses.

Are you one of those people who claims they have no time?  Today most of us are carrying mobile devices that deliver a constant stream of information 24/7, whether we want it or not. Look around you—chances are you’ll see more than one person with a cell phone to their ear or worse yet looking like an escapee from a psychiatric institute talking to themselves through Bluetooth.  Problem is, entrepreneurs of the world, if you don’t shut off the noise once in a while, you’re going to miss a great opportunity. Don’t suffer from information overload. 

 Don't ask for investor money unless you're in business in a serious way. If you're going to ask investors  to risk their hard-earned money, you'd better be worth the risk. 

Kim and David Chauvin are no strangers to tough times.  Their shrimp-trawling business in Louisiana has survived four major hurricanes in five years, but the two had amassed enough savings to carry them through the floods that Katrina and Rita brought in 2005.  But 2008 brought Gustav and Ike (not to mention the financial crash)  and that meant that this family business had to apply for a disaster loan from the SBA. just to survive.  Now they're struggling with the losses brought on by the gulf oil spill, and the problem is, they already have a $170,000 loan from the SBA  they're paying back so they can't go after another emergency loan.  Instead, they've signed a contract with BP to work on the cleanup. 

Given the frequency with which entrepreneurs are discussed in the media,, it's not surprising that stereotypes have developed around them. Not all of these stereotypes are flattering, however,  and mostare simply false. I want to dispel three myths surrounding entrepreneurs so that you can begin your entrepreneurial journey based on facts.

 I just finished reading a recent edition of Leader to Leader put out by the Leader to Leader Institute and publisher Jossey-Bass (my blog-mate Peter is an Associate Editor for the journal). This time they included a special edition celebrating the life of management sage Peter Drucker on what would have been his 100th birthday (he passed away in 2005).  Often referred to as the greatest management thinker of the last century, he understood as far back as the 1950s that there is no business without a customer. 

This morning's LA Times (paper edition)  led with an article, "Economic Fears Rise as Stimulus Ebbs."  Here we go again.  Articles like these underscore the fact that no one seems to understand the economics of growth and job creation. One business owner is quoted in the article as saying that his biggest job this year was a stimulus project repairing a pipe at the Veterans Administration building.  "My company's on the verge of closing," he said. About $18 billion of California's stimulus funds has been spent on Medicaid, unemployment insurance, food stamps, schools, and job centers.  I'm sorry, where is the job creation?  Can you imagine what a bunch of entrepreneurs could have done with that $18 billion?

 How do you succeed in a tumultuous industry that can't seem to do anything right and that regularly sues its customers?  Meet the heroes of the retail music industry, Mike Boyder and Marc Weinstein, co-founders of Amoeba Music, a three-store California retailer that is the self-proclaimed "largest independent record store on the planet."

I'm posting this blog from beautiful Sioux Falls, South Dakota where, with my N2TEC Institute co-founder Tim Stearns,  I'm helping 9 entrepreneurial teams launch their new technology businesses. I can hear the response from all of you--South Dakota, do people actually live there?  Well, yes they do and unlike most of the rest of you, they have stubbornly refused to participate in the recession.  In fact, South Dakota was recently named in "the most entrepreneur friendly state in the Small Business Survival Index put out by the Small Business & Entrepreneurship Council (California ranked 49 and New York 48 - so much for the notion that nothing happens in flyover country).  This organization ranks the policy environment of all 50 states plus the District of Columbia.

 I've been told I'm pretty passionate about the things I do and I jump into life with both feet (they don't always land together), but I can't come close to Tony Magee, author of an inspiring paperbackaptly named, Can't Shove a Great life into a Small Dream!  The man literally defies gravity with his enthusiasm for life and the people he is helping.  And with bestselling authors like Mark Victor Hansen and Jack Canfield of the Chicken Soup for the Soul®, and Zig Ziglar, of See You at the Top, singing his praises, Tony is definitely on his way to helping a lot of people achieve the life they've always wanted.

Emerging industries are the Wild West of the 21st Century, and nowhere are things wilder than in the emerging private space enterprise industry. Driven by entrepreneurs, many of whom put their own wealth from successful Internet ventures into their new space companies, it's the natural venue for the search for opportunity where no one has gone before.  In this case, the opportunity is to make space transportation better, faster, and cheaper; and at least one famous entrepreneur, Elon Musk, secured a big win with the successful launch of Falcon 9 last Friday.  

 Peter and I have written numerous posts about the benefits of social media to entrepreneurs who want to promote their businesses and get customer feedback and to individuals like consultants and service providers who want to promote their personal brand. But there is a dark side to the social media groundswell and it's found in the increasing rate with which we appear to be losing our privacy.

My good friend Peter asserts that it's time to get NASA out of the way and hand over the reins of space exploration to private companies like Space X and Virgin Galactic. (See Privatize space now). Speaking as someone who has been involved with the private space or New Space industry for several years and knows a lot of the major players, including those that Peter mentioned, I need to set the record straight. For one thing, private companies like Space X get significant government funding and contracts (the most recent was $1.6 billion from NASA to launch 12 cargo missions) and Virgin Galactic will launch from a taxpayer-funded spaceport in New Mexico. This is hardly getting the government out of the picture.   

I have just returned from witnessing up close and personal the launch of the final mission of the Shuttle Atlantis at the Kennedy Space Center in Florida. Needless to say, the launch was one of the most amazing sights I have ever seen. The tension leading up to the final ten seconds before launch was palpable as my engineer colleagues from Pratt & Whitney Rocketdyne, which developed and produces the shuttle's main engines, worked through the launch sequence of activities in their minds in solemn tribute to their colleagues in the launch center who were making the vital countdown decisions. When you consider everything that must go right in just the right sequence, it truly is a marvel of engineering and foresight. Those of you who have come to view these shuttle launches as “business as usual” (and that’s most everyone), you might be interested to know that there was a time when no one was convinced the shuttle could ever be developed.  

 If there is one common theme among all the stories I've heard entrepreneurs tell about their ventures (and my own experiences as well), it's that you have to get the team right or you'll struggle--or worse--fail. I could talk all day about teams but I want to focus on a major issue that leads to big problems: an incomplete or mismatched team DNA.

 I'm as bummed as the next business person about the government over regulating the marketplace, mostly because it means higher costs for businesses, which translates to higherprices for customers.  Businesses generally can't survive unless they pass on those higher costs to their customers whether they want to or not.  But, being the glass-half-full kind of person that I am, I believe that every negative situation usually contains the potential for an opportunity that someone will take advantage of, and regulation is no different in that regard. 

 You've just been hired as a project manager at ABC Start-up, a new media company. Because it's a start-up, you're given a relatively low salary in addition to stock options (the right to purchase stock at an agreed-upon price at some future date) that look promising because the founder says she's expecting to complete an IPO in the next 3 years on a valuation of at least $500 million. That's exciting!   Before you get too excited, however, (Wow, that means my 1% of the company will be worth $5 million in three years and I can retire at the ripe old age of 26), you might want to consider some red flags and a little item called "dilution."

This week I had the pleasure of meeting and talking with Scott Lenet, co-founder and managing partner of DFJFrontier, an early-stage venture capital fund with offices in Los Angeles, Portland OR, Sacramento, and Santa Barbara.  To be quite honest, until now I did not have a very favorable impression of venture capitalists--hence the term vulture capitalist, which is often applied to disparage them.  Venture capital funds are professionally managed investment funds that typically invest in companies at the rapid growth stage or just prior to an IPO (initial public offering) or M&A (merger or acquisition).  If you've ever been in a room with a bunch of venture capitalists, you know that the arrogance is palpable.  And you've no doubt heard the horror stories of the nasty VCs who wanted to steal a company from its hard-working entrepreneur.  In some cases, the stories are true...but not always.

After several posts on this issue of employee ownership, I have come to the conclusion that Peter and I don't really disagree on the importance of employees having a vested interest in the companies for which they work - we're just coming at this from two different perspectives. 

We're comparing apples and oranges.

In his recent post Peter wrote about the benefits of making employees feel like owners by giving them stock so they'll act like owners.  On the surface that seems like a logical way to go but if not considered carefully, your good intentions could become a train wreck of problems.  What do we mean when we say that we want our employees to "think like owners?"  If employees wanted to think like owners, it would seem that they wouldn't have chosen to be employees in the first place but would be out there starting businesses. 

In a post last week about the potential effect of the new Healthcare bill on small business, I talked about the importance of assessing your business's cash flow position so you can weather the changes that will be coming. Insuring that your business is sufficiently cash flow positive is the first step.  The second step is to make sure that your business remains flexible and ready to change quickly.  That means not taking on non-essential capital expenditures such as a new building,  new equipment, or even extra people for that matter.

For most people, March Madness is about basketball, but for entrepreneurs who create inventions that have social impact, March brings "March Madness for the Mind," an inspirational event sponsored by the National Collegiate Inventors and Innovators Alliance (NCIIA).  NCIIA is a non-profit organization that supports technology innovation and entrepreneurship in higher education with the goal of creating experiential learning opportunities for students and ultimately socially beneficial businesses. I just returned from speaking at the 14th Annual Conference, which took place in San Francisco and I was impressed and inspired by the inventions I saw.. 

On Tuesday, Nation's Restaurant News asked its readers to let them know how their restaurants would fare under the new health care reform bill (which is still under revision). It appears that restaurant owners, among other types of small businesses, are feeling a great deal of concern.  "This will close our business.  The downturn in the economy and the escalating cost of labor, food, and fuel has us using our own savings to meet restaurant expenses," claimed one Savannah, GA business owner. 

Peter and I seem to be on a funding streak lately with our recent posts, probably because so many people are asking for advice on how to fund their businesses in these difficult times. In the past week alone, I've been contacted by four entrepreneurs looking for money from me or my network.  To a person, they all approached the issue in the wrong way.

 I want to follow up Peter's great post about angel investors with my two cents from the perspective of an angel investor.  In addition to all the great advice in that post, it's important to note that angels are generally bypassing companies that don't have customers yet.  They might get involved to mentor the team to prepare them for money, but they won't risk their money in this economy until the business is revenue generating.  

Tuesday I had the pleasure of meeting the producer of the documentary film The Triumph of the Dream, Norman Seeff, a medical doctor turned photographer.  In a a visually intimate and compelling style, Seeff explores the human and emotional side of the Mars Exploration mission during which engineers at Jet Propulsion Laboratory (JPL) successfully landed two Mars Rovers on the surface of the planet. It turns out that the technical achievements of the mission served merely as the context or backdrop for the very real inner journey experienced by the team members as they struggled to overcome the inertia of previous failures with the Mars Polar Lander mission in 2000.

More than one entrepreneur has looked forward to the day when his or her company might become the dominant player in the industry, the company that everyone wants to emulate.  In the search business that company is clearly Google.  But this week's headlines give you a different picture of what it's like to be number one--as number one you're also the biggest target of expensive, lengthy, and often damaging lawsuits. 

Lights! Camera! Action!  "Oops, I didn't know you were actually going to film EVERYTHING."  That's what small business owners are learning as they let TV cameras into their businesses and their lives 24/7.  Most like Duff Goldman who owns Charm City Cakes LLC in Baltimore, which is now featured on the Food Network's "Ace of Cakes, would say that if they had read the fine print in their contracts, they would have probably said no.  "But we learned to deal with it all," claims Goldman in an interview with WSJ journalist Emily Maltby.  His business found that because of the intrusion of the film crew, they were making fewer of the unique cakes for which they're known, which meant less revenue. To make up the loss, Goldman had to develop licensing deals, write books, and do speaking gigs.  He did receive money for doing the show, but it wasn't enough to make you do the show for the money.

Just three years ago, I had the pleasure of meeting one of the smartest and most interesting people on the planet--Nathan Myhrvold, Microsoft's former chief technology officer and director of research.He's unassuming and approachable with a quiet confidence that hides the fact that he is a very wealthy man.  In 1999 when he left Microsoft, he was on the Forbes list of the 400 richest Americans.  He could have simply retired, enjoying his wealth; but having money is not that important to Nathan--in fact, he's notoriously frugal.  Money's only value lies in what he can do with it to solve some of the world's biggest problems.

 Unless you've been hibernating in a cave in Alaska, you've heard a number of people talking about tort reform when it comes to reducing the costs of health care.  But I wonder if you are aware that as an entrepreneur you can be held liable for the tort of negligent hiring, which essentially means that you hired the wrong person for the job or didn't use a duty of care in selecting that person.  Well, guess what--you and lots of other entrepreneurs are at risk.

Small business owners are some of the brightest and hardest working people on the planet.  They have to be because they now find themselves competing in a global environment for customers, employees, suppliers, and distributors.  And their competitors are coming from places they had never even heard of.  It's not your grandma's small business anymore.  So are SB owners going to rush out to grab up the announced government subsized loans through the SBA?  I'm not so sure

Apple just announced its long-awaited tablet device and they've dubbed it the iPad. Upon hearing this,  I immediately tweaked a number of my female friends to see if they were laughing as hard as I was.  They were.  I guess Jobs thought it was time to bring feminine products into the digital age. 

When you work with someone for a long time, you begin to get in synch on things you're thinking about.  Don't know how that happens, but once again Peter has posted a topic that I've been thinking about recently.  In his recent post A great big leap of fath, he talks about the importance of not losing your belief in what you're doing when you start to hit the obstacles that are sure to block your path.  One of the biggest obstacles I see in people who have decided on a quest to achieve something big like The New York Times bestseller list is the problem of getting traction.

I had to laugh when I read Peter's post Free is the New Black because I had just decided to cancel my online subscription to The Wall Street Journal (for which I was paying $155 dollars a year - up from $99 in the past two years alone).  It seems that everything I wanted to read in the WSJ was already available to me for free on the site.  Sure, WSJ probably won't let me search its archives once I'm not a member but there are other ways to find that information if I really need it. 

Wow!  This time I really have to disagree with Peter in hisrecent post where he asserted that if Google leaves China it will be to protect its shareholders and the integrity of its data, not because of principles and business ethics.  Protecting your online business from hackers is something that every business must do no matter where in the world they operate.  China does not have a monopoly on hackers.  But, Google's mission is to make the world's information "universally accessible and useful," and its corporate motto is "Don't be evil."  That goes to the heart of the problem in China.

I don't know about you, but I am watching closely to see how Google ultimately deals with the recent problem it's had in China.  You would have to be in a coma not to have seen the news about what Google founders Larry Page and Sergey Brin have called a "highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property."  They are now looking at potentially leaving China because they no longer want to remain silent about these attacks and they no longer want to censor their search engine in China, something that has been required of them since 2006

Have you been noticing that your customers have been delaying their payments to you?  Not surprising in these times that customers want to preserve their free cash--the cash that is available to operate and grow the business.  This practice may be great for your customers (you may be doing this yourself to your customers), but it can wreak havoc with your company if you're not careful. If you have a business that depends on active cash management (and what business doesn't), you need to monitor your daily cash flow

In my previous post just before the New Year, I talked about the fact that we should strap ourselves in for some interesting times and that it's better to be proactive about change rather than reactive.  In the 2008 election, about 52% of the country voted for change.  They were expecting change, and change is what they got (one could argue whether it was the change they wanted, but I digress).  The point is that it's an established fact that our minds tend to give us what we expect. if not always in the exact form we want.

Those of us involved in starting and running businesses (and that's millions of us) could describe the first decade of the New Millennium as a wild ride to say the least.  I won't reiterate here all the events we know so well that affected businesses large and small (every journalist and blogger will be doing that over the next couple days).  What I will say is that if the first decade is any indicator of what life will be like going forward, everyone should consider putting on their entrepreneur hats and tying them tight because it's going to be a bumpy ride.

Even though the U.S. Senate is determined to give us all a present on Chirstmas Eve that we'll definitely want to exchange or regift to someone we don't like, I have to say that this is one of the best times of the year. People are out and about--they may not be buying as much this year, but they look happy and less frightened abut the future than they did last Christmas season.  Optimism is a good thing.  Entrepreneurs tend to be optimists who look for opportunities in situations that other less creative types might find daunting.  The cup is always half full, I say..

Small businesses need to manage their cash flow, and in times likes these, that's not so easy.  If their customers fail to pay on time (or at all), they're left having to find a way to pay their employees and purchase their inventory until the cash comes in.  Since for now banks are not cooperating with small business loans, many owners have resorted to business credit cards to carry them over the rough times.  That's fine if things go smoothly, but beware--business credit cards are not as friendly as they used to be. 

The big buzz in the start-up world is mobile communication, whether it's to find things, opt in to special deals from marketers, or conduct your buy/sell transactions from your iPhone.  In the last few months alone I have seen a number of these businesses--it's the wild West out there--but the jury is still out on which ones will stick and which will simply disappear. With a global mobile payments market expected to reach nearly 2 Trillion in the next decade, it's no wonder that entrepreneurs and investors are scrambling to find the platform that will become the standard.

Friday night I was having dinner at a wonderful restaurant in downtown Los Angeles.  It's called Provecho , a modern, upscale Mexican experience, and it was started by a former graduate student of mine and her chef husband.  Now you would think that downtown Los Angeles would be hopping on a Friday night, but no.  You could find more people at upscale restaurants in Sioux Falls, South Dakota on any night of the week than you'll find at the terrific restaurants in downtown Los Angeles. 

I was so distressed when I read Peter's recent post about Kiva.org (A little less love for Kiva.org) because I am a lender and I've given Kiva gift certificates to people to get them involved in helping others start or run their small businesses.  Peter wrote about how big business Kiva has become and how the very thing that drew most people to them (one-to-one lending) is the very thing they tinkered with to the dismay of many of their most loyal customers. The precarious position that Kiva has put itself in reminds me of how often some entrepreneurs foresake the core values that were the very reason for starting the business in order to grow and make more money.

In my last post I asked if you were ready for investor money.  I'm sure some of you said, "Absolutely! Bring it on!"  However, if you honestly answered the questions in that post, you know that taking other people's money is serious business.  And it also doesn't happen overnight.  So how do you find investors who might want to help you out?  It starts with some detective work on your part to learn where investors congregate.  This is important because investors aren't always easy to spot--they don't exactly put a sign on themselves so entrepreneurs can find them.  In fact, it's quite the opposite; they usually rely on their own network to supply them with leads on potential new business investments. 

At least two to three times a week I hear from an entrepreneur seeking money to start or grow their business. Usually they need the money yesterday.  Sometimes the request comes from people I know, but, more often than not, I've never heard of the person or they've found me through six degrees of separation on Linked In.  Believe me, cold calling people who know nothing about you or your business is not an effective strategy for raising money.  How to search for money will be the subject of my next post, but today I want to focus on whether you're even ready for investor money.

You know the old saying about the three most important factors in real estate--"location, location, location."   Could the same be said for where you start your business?  Fortune Small Business and the Kauffman Foundation certainly think so.  This month they once again brought out their "Best Places to Launch" report and the findings just might surprise you.  It did me because California, where Peter and I are, is nowhere to be found on any of the lists that include the top 50 cities in small, medium, and large categores. 

If you're one of the thousands of potential entrepreneurs who want to make their mark on the Internet, you need to understand where things are going and there's no place better to do that than at the annual Web 2.0 Summit, which took place last week in San Francisco.  Unless, like my grad students last night, you get the chance to have a conversation with CEO/founder Richard Rosenblatt of Demand Media, arguably the person who knows more about how to deliver unique content to users in a way that is meaningful to them than almost anyone today.  That's because his company in just 3 short years has not only become the leading producer of unique content on the Web through its network of freelance creators, it is also the undisputed leader in distributed social media, powering the conversations of 3 billion users on sites such as USA Today, Fox News, and CNN.

Who would have ever thought that you could base an entire business on Twitter, but as Peter's prodigious post  pointed out (don't you just love alliteration), anything is possible in the world of social media.  I don't want to throw water on that notion, but I do want to caution that there is a dark side to Twitter that you should be aware of if you're going to do business on it.  For one thing, it can quickly become a viral nightmare of negative press if you don't nip it in the bud. 

In the category of "you can't make this stuff up," Peter and I are collaborating on this post to tell you about a proposed mandate by your friends at the California Air Resources Board (also appropriately known as CARB), California's equivalent of the Environmental Protection Agency.  The new mandate will have enormous unintended consequences for businesses large and small.  On the heels of their recent losing effort to ban black cars because they absorb more heat causing their owners to use more air conditioning, CARB has come up with yet another ridiculous regulation to supposedly save energy.  This time they're proposing mandating that automakers install metallic reflective glazing on all new vehicles weighting under 10,000 pounds and sold in California beginning in 2012. . 

This post is coming to you from midtown Manhattan--the Waldorf Astoria to be exact.  As I'm sitting in the lobby taking advantage of the free Internet and doing some people watching, you would never believe we are in a down economy.  The place is hopping with business people, all on what seem to be important missions--at least they act like they're important.  Of course, part of the explanation for the activity is that many of the investment banking firms moved to midtown from the financial district after September 11 and the Waldorf seems to be at the center of things.  Even our President thinks there is money here because he came to Manhattan for two Democrate Party fundraisers last night.   

A recent Wall Street Journal headline asserted, "Videogame firms make a play for women."  It seems that videogame publishers are racing to launch games geared to both young and older women by the holiday shopping season.  Well, what took them so long?  Women aren't exactly a niche market; in fact, they now constitute more than 51 percent of the population--they ARE the mass market.

It's not often that I disagree with Peter, and actually I'm not really disagreeing with Peter.  I'm disagreeing with one of the entrepreneurs he cited in his most recent post.  The entrepreneur, Justin Kan of Justin TV, claimed that "90 percent of start-ups fail because the founders get bored, discouraged, or something else, and they move on to other things, not because of some catastrophe."  Well, I don't know where he got his statistics but let me give you the top five reasons new businesses fail.

In the past week I have been frustrated by entrepreneur wannabes who are enjoying the planning phase just a little bit too much.  They figure that they can feel like they're real entrepreneurs by simply talking about their yet-to-be business without ever actually getting down to starting the business and making it real.  In fact, I know at least several of these wannabes who have been talking about their business for at least two years with nothing to show for it except a business plan.   Some of them have entered (and in some cases won) one or more of the ubiquitous business plan competitions that seem to be a mainstay of every university or college on the planet.  Still, they don't have a business.

I wonder how many entrepreneurs really think about all the possible markets for their products and services and devise a roadmap for rolling them out over a period of years.  I suspect very few.  Why? because,  to use a quaint phrase, too many entrepreneurs start businesses that are one-trick ponies.  They have nowhere to go from where they started. 

I hate to say this, but Google has made us all a bit lazy--not to mention fatter from sitting for hours in front of our computer screens.  It's just too easy to search for what we want without moving more than our fingertips, but that deeply ingrained habit has negative ramifications for what we do as entrepreneurs.  There is no substitute for getting out of the office and talking face to face with customers, suppliers, distributors, and anyone else who affects the success of your business. 

I teach a course in entrepreneurship for engineers at the University of Southern California, so I'm used to having to persuade budding entrepreneurs whose lives have focused on technology  that it's not about the technology when you're designing a new business venture.  It's always about people, their needs and how you deal with them.  It wasn't surprising then when USC alum and successful entrepreneur Shannon Blake Gans came to class this week to talk about her company and the lessons she's learned that students figured she would focus on what her company does.  After all, it is a pretty sexy company in the film industry, but they quickly found out that although the technology is important, it's probably not the critical success factor for the business. 

Remember Famous Amos the cookie guy?  He's known for the now way-overused phrase "when life hands you lemons, make lemonade."  It's his mantra for entrepreneurs to take charge of their lives when things get tough.  Well, if you plan to cater to the luxury market with your new business, you may have bought a lemon and will have to figure out how to make lemonade in this weak economy.

I've said it before and I'll say it again.  The surest path to a healthy economy is through innovation and entrepreneurship.  Apparently Sramana Mitra, technology entrepreneur and columnist for Forbes, agrees with me.  In her latest book, Bootstrapping: Weapon of Mass Reconstruction, which, by the way, is self-published, she showcases 12 successful entrepreneurs who made it to the top by bootstrapping at the start.

We all love a good story--a great plot, compelling characters, a challenge that the protagonist has to overcome, and an ending that makes us feel satisfied.  Stories serve many purposes--to explain, to entertain, to inspire--but for entrepreneurs stories help to craft an identity that gives the new venture legitimacy in the eyes of investors, competitors, partners, and customers.  What I mean by this is that for entrepreneurs to secure the resources they need to launch and successfully operate their businesses, they have to be viewed as legitimate members of the business community and that doesn't happen easily. 

Are you suffering from Facebook Fatigue?  Are your friends annoying you with trivial tweets about what they're eating? Do you really want to join and socialize on Wal-Mart's facebook page or learn what your Congressperson is doing at any point of the day or night through his or her attempts to act like the average joe? Who has the time for all this connecting in cyberspace

One of the hot topics in business today is executive or management compensation.  With Congress firmly convinced that businesses and their shareholders can't make wise decisions about how to compensate their people, a number of compensation reforms are being floated that have a common theme--government telling businesses how and when to compensate their employees. 

Peter reported on a very upbeat VC study in his his last post.  I'm not disagreeing with the study, but I'm not sure I'm ready to declare anything close to robust investment activity.  The reason I'm skeptical is that the most recent MoneyTree Report from PricewaterhouseCoopers LLP and the National Venture Capital Association (July 21, 2009) is claiming that although there's an "overall increase in investment levels...," the number of deals has remained flat at 1996/1997 levels. 

I don't know about you but I am scrambling to understand all the acronyms that have been popping up in text messages lately.  Apparently I'm not the only one who can't tell whether I should be concerned about whether NSFW is a good thing or a bad thing. 

For years people have moaned and groaned about the outsourcing of U.S. manufacturing capability to other countries, namely countries where the cost of labor is substantially cheaper.  Whether or not outsourcing is a good thing is really a moot point because it's now a fact of life.  I'm afraid that it won't be too long before we say the same thing about innovation.  The fact is that an amazing number of corporate research laboratories are being opened in China.

I just returned from Sioux Falls, South Dakota where the non-profit institute that I co-founded with Tim Stearns has been running a Technology Accelerator Program over the past 8 weeks.  The goal is to get 7 new technology companies through the last mile of development and launched. This week we held a deal -dating event where the entrepreneurs pitched their businesses to a series of investors. 

Starting a business is not for the faint of heart and, unfortunately, many would-be entrepreneurs don't stop to question themselves before they make the leap.  If things go well, the successful entrepreneur will often blindly dive into the next deal feeling like he or she is golden.  That's what one billionaire entrepreneur I know did; in fact, after a huge sale of his very well-known company, he dove into three very diverse high-risk ventures believing that he couldn't lose--he had the Midas touch. 

Have you recently tried to get a domain name for your new company?  If you haven't, let me fill you in on the facts.  The chances of your getting the name you want is zero and zip.  Sorry, that's the truth. Unless you're going for something a bit nonsensical such as Zooomr, or Oooooc, you going to find a veritable wasteland of possibilities. 

I hear too many people complaining that it's tough to make money with the economy in a deep slump.  Well, some very ingenious people. with what could only be described as wacko ideas, have managed to make money, in some cases A LOT of money.  I guess it's true that there's a sucker born every minute, because whatever you want to sell, there does seem to be someone in the world crazy enough to buy it.  Take a look at some unlikely businesses that have made money for the people who founded them.  Then ask yourself---why didn't I think of that?

This afternoon I was monitoring NASA TV for what was to be the launch of the space shuttle Endeavor.  Ultimately, once again, the mission was aborted for weather, but as I listened to the rocess leading up to the scrubbing of the launch, I couldn't help but see the parallels with the kinds of things entrepreneurs go through at the run-up to the launch of their ventures, or the challenges that thwart a company attempting to secure an investment or complete an IPO.  As with a shuttle launch, it's all about timing and polling all the relevant stakeholders for a go/no-go decision before the final committment is made.

Peter's post on signs of a turnaround was certainly welcome to most of us, but those of us who decided not to participate in the recession in the first place did not wait for recovery signs before starting or growing our businesses. Nevertheless, it seems we may not be in the majority .  Today during an interview, a reporter told me that my view of California's competitiveness going forward and the ability of entrepreneurs to be successful in a down economy was quite contrarian compared to some of the entrepreneurs he had interviewed. 

This summer I’m working with five new technology companies that are in the process of going from bench to business. What is common with all these entrepreneurs is the belief that once you have a product, all you have to do is find a customer to buy it and you’ve got a business. (Remember I talked about going from idea to prototype in my previous post) Yes, Peter and I are famous for saying that without a customer you don’t have a business, but that’s just a clever saying. It completely overlooks the fact that a business has a lot of moving parts and the entrepreneur, the product, and the customer are just three of them.

If you saw my previous post, "With Apologies to Mr. Richter," you know that every technology business experiences the valley of death.  But, no matter what type of business you're trying to start, you need to do a proof of concept before you go all out and launch the business and to do that you need a prototype, which is simply a working model of the business--the product or service being offered.  Why? Because you can't get good feedback from customers if you don't have something they can see, touch, and interact with. 

One thing we writers are good at is taking others' concepts, repackaging them, giving them a new name, and then proclaiming a new discovery.  Geoffrey Moore essentially did that when he popularized the work of the Department of Agriculture in Iowa in the 1930s on the technology adoption-diffusion cycle in his very successful book called Crossing the Chasm.  Blue Ocean Strategy, another best-selling business book, gave a new name to an old entrepreneurial strategy--looking for unserved needs in the market.  So, not to be left out of this game, I developed what I call the Allen Technology Richter Scale, with all due apologies to Mr. Richter who helped us measure the intensity of earthquakes.

New entrepreneurs often think that they don't have a chance if they enter a market that has some big-name players in it.  Really, would you want to go head-to-head with Microsoft or GE or Google?  Only if you have a death wish.  But there are ways to enter a market with major players and still be successful.  Why?  Because the big boys (also known as the "incumbents" in research lingo) have some serious things going against them.

I have to admit that I took three days off and did absolutely no work.  I didn't even have access to the Internet or email.  It was fantastic!  I highly recommend it to all you Type A, multi-tasking, think-you're-so-productive type business people who can't be away from your networks.  Trust me, your network will survive.  Yes, you'll return to a full inbox or Tweetdeck, but, frankly, most of it you'll be able to delete without reading (saves lots of time). 

If your sales are declining, it may just be time to give your customers a break.  At least that's what Dana Mattioli contends in her Wall Street Journal artice today. More and more small businesses are figuring out ways to entice customers to buy even in a down economy.

When you think of technology businesses, it's not likely that South Dakota is the first place that comes to mind.  After all, for most of you, the entire center of the US is simply "fly-over" country.  But I have had the good fortune to discover untapped opportunity there through the work I've been doing with the institute I co-founded, N2TEC Institute.

I couldn’t let Peter’s post pass (notice the alliteration) without commenting because I’m not sure I agree totally with the premise of the New Yorker article he referred to. I have served as a director of a NYSE company for 9 years and on several private company boards and have talked to many public company directors across the country. We need to be very careful about painting a broad brush when we talk about some of the things the public is unhappy about because of the subprime debacle and the auto industry implosion.   

The other day I received an email from someone I've known a long time who is definitely a promoter type - big on hype and talk about how what they're doing is the greatest idea on the planet.  You may know someone like this - they surface every couple years touting the next big thing they're working on.  After a while you think - yada, yada, I hear the talk, but where's the result?

We all talk about friends and family money as an important source of startup capital, but before you grab that cash from mom and dad, you might want to consider why it may not be a good idea.  Here are the top five reasons why you shouldn't take money from relatives.

1. My parents believe in me and want to do this.  Of course, they believe in you - what they believe is that you're a good person so you would do nothing less than take their small investment and turn it into a fortune that will take care of them for the rest of their lives, right?  Remember, to your parents you're always a kid--even if you're 45!  So, if you have their money, they're going to watch it and you like a hawk.  That sounds like fun, doesn't it?
    

Although I have a background in music and have done my share of performing (in my previous career), I would never be confused with a hip-hop artist.  But that's OK because if I want to I can become one and actually get my original work showcased on MyCypher.com, all courtesy of entrepreneur Curtis Jewell. 

I’m in the middle of preparing some materials for a three-day corporate seminar I’m giving in June on innovation and technology commercialization and I’m trying to decide on the key concepts I want to focus on. One of those concepts is definitely the idea that we should worry less about the competition and focus more on how we position ourselves uniquely, so that in the customer’s mind we stand out from the crowd. 

Last fall creative writer Jaime Case found herself out of a job when the Internet start-up she had been working for ran out of cash and shut its doors. Is that a familiar story?  After about three months of searching for a job that would let her use her talents and not finding anything that would pay her enough to keep her in the style to which she had grown accustomed (eating, roof over her head, etc), she decided to take matters into her own hands and begin the life of a freelancer. Today, she has several contracts, is in control of her days, and is finding new ways to leverage her skills. In short, she has become one of the thousands of freelance entrepreneurs who are discovering that while all sorts of jobs are in decline, contract work has actually increased.

There is a huge cultural change going on all around us--you would have to be in a coma not to see the evidence--and it has ramifications for innovation on a global scale that we don't yet understand.  I'm talking about the cultural shift to short-term thinking and instant gratification.  We see it in every facet of life, from short selling in the stock market, to investors opting out of really early-stage ventures because the time to exit is too long, to students leaving PhD programs in science and engineering for lucrative business jobs right out of college, to communication tools like Twitter.  We want what we want right now--we have no patience for long-term thinking.

I'm not really a follower of American Idol and it's mean-spirited producer/judge Simon Cowell.  And I've never seen the British counterpart "Britain's Got Talent" until this morning when a colleague sent out a YouTube link that I would like to pass along because it speaks so well to the idea of persistence and to the power of talent to win out in the end. 

One of the really great things about teaching budding entrepreneurs is that sometimes they come back to tell you how much they've used what they learned or what an impact you had on their lives.  I think that's why a lot of people have found so much joy in teaching.  I don't know about you but the days when someone takes the time to tell me how much they appreciate what I did are the best days of all.  Some of them thank you in a way that just keeps on giving.

The popular reality show Survivor got people talking about tribes and voting people off the island (much like Jim Collin's Good to Great mantra of getting the wrong people off the bus).  But the idea of modern-day people organizing themselves into tribes actually stemmed from the work of British anthropologist Robin Dunbar and was popularized in Malcolm Gladwell's The Tipping Point. 

If you've been hungering for a community of thinkers and doers who can inspire you to be the best you can be, look no further than TED.  TED is not a person; actually, it's an acronym for technology, entertainment, design.   In 1996, Chris Anderson, a magazine publishing entrepreneur,  set up a nonprofit foundation, the Sapling Foundation, to support the mission of TED, which is to give "millions of knowledge seekers around the globe access to the greatest thinkers and teachers." 

There's hardly a more interesting time to be in Washington DC than now (apparently the President didn't agree with me because he was in Burbank yesterday).  No, I did not come to Capitol Hill to beg for a piece of the stimulus pie, although it seems that everyone else has and no one seems to know how we'll pay for the pie.  The cafeteria of the Rayburn Congressional Office Building was jammed with lobbiests plotting and planning how to snag some bucks from the government (that's us). 

I would like to claim ownership of the title of this blog, but if I did that I would be plagiarizing the very person who is known for the Character Counts program that educates more than six million kids about the importance of character and integrity, trustworthiness and good citizenship.  That person is Michael Josephson, the entertaining ethicist who is founder of the Michael Josephson Institute of Ethics in Los Angeles where he also hosts a national radio show focused on--what else?--ethics and character. 

Well, the Allen-Economy Stimulus Package for entrepreneurs started off with a bang, with Peter giving every individual a million bucks from the government.  Makes sense when you consider that it probably amounts to less than the proposed budget. by a whole lot!  I have no problem with wealth - I just don't think it's the government's job to make us wealthy.  Entrepreneurs are pretty good at doing that themselves, thank you. 

I am a huge fan of Warren Buffett's investment philosophy because I think it applies not only to investments in stocks, bonds, and other cash equivalents but to entrepreneurs as well.  Today I was reading Buffett's letter to the shareholders of his enormously successful company Berkshire Hathaway Inc.  Now, believe me, with the exception of a notable few, I don't spend my time reading annual reports because most are pretty boring.  But I always find that I learn something new when I read Buffett's annual letters to the shareholders, and they can be quite entertaining as well. 

Recently Peter posted an interesting piece on Mark Cuban's solution to stimulating the economy.  While I agree in principle that entrepreneurship is the way to make things happen, one could question Cuban's motives in his approach.  Actually last night one of USC's great grad students did question those motives, so I'm sharing his thoughts in my post. 

If you want a push to get that business started and you need a little seed capital, you will find both in an innovative program in South Dakota.  Yes, I did say South Dakota.  I realize that many people don't know that part of the country even exists- those of you who fly from one coast to the other without ever stopping in the middle - but some very entrepreneurial things are going on in the northern plains states.  One of those things is the N2TEC Technology Accelerator program, which is providing $15,000 grants to entrepreneurs to spend 8 weeks in South Dakota and get their businesses ready for launch.

The more information you have, the easier it is to solve a problem.  Unfortunately, entrepreneurs typically don't have all the information they need to define the problem they're actually trying to solve.  Defining the problem correctly is absolutely essential to coming up with a business opportunity that can succeed in the market. 

I can't begin to tell you how many requests I get from people who are looking for someone to write their business plan.  The request usually starts with something like "I've got this fantastic widget I've created that is going to change the world, but I need a business plan so I can pitch to venture capital, and i don't know anything about business." 

I have to say that Peter hit the nail on the head when he decided to take a vacation from the news and everything else that was being pushed at him. One of my dearest friends is a very prolific inventor.  He is Dr. Berok Khoshnevis at the Viterbi School of Engineering at USC.  He has come up with more solutions to more problems than you can imagine and he's done it by spending time alone with his thoughts. 

One of the best things about what I do is that I get to meet some really interesting people.  So when an entrepreneur with an apple pie business left me a message on my phone, I was intrigued. (I LOVE apple pie).  But little did I know that the Mary Beth Schwartz who contacted me is better known to her millions of fans as Mary Beth Evans  who plays Kayla on NBC's hit soap "Days of Our Lives." 

The good thing about ideas is that we never run out of them.  If you're an opportunistic person, you will find that your biggest challenge is figuring out which of your many ideas are worthy of some investment in time and maybe money.  I've found that answering three quick questions will help you make that decision.

One of the most important lessons I've learned in my years as an entrepreneur and investor is not to get greedy, not to hold out for the bigger deal, and not to negotiate a win-lose situation.  I have seen entrepreneurs turn down great offers because their egos told them that their companies could command a bigger number.  Trouble is, these days offers don't come often, so the risk of turning down a good offer in hopes of getting a great offer is huge. .

Opportunity is out there for the taking.  That's an indisputable fact, even in this economy.  Would it surprise you to learn that innovation actually goes up in recessionary times?  Well, it's true.  For example, during the 1982 recession, the PC was born and the 1990 recession produced a record 174,711 patent applications.  What's going on here?  A lot... 

A while back Peter blogged about the importance of  focus,  specifically, focusing on what your business does well.and not getting pulled in a lot of different directions.  I agree with that, and especially if you're a rocket scientist, brain surgeon, or race car driver ,you definitely need to focus or you're in big trouble.  But if you're facing the unknown--uncertainty--the LAST thing you want to do is focus... 

Everywhere you look today the pundits are making predictions about what’s going to happen in the coming year, in the next 4years of Obama’s presidency, and even as far out as 2020. With so much uncertainty out there, how do they think they can predict anything? After all, life is not a sterile, controlled laboratory.

I agree with Peter that everyone seems to be making New Year's resolutions--all with great intentions that they will be accomplished.  But, really, how many of you have actually achieved those goals?  I want to suggest a contrarian point of view, which will be strange coming from me, since I have spent my life setting goals and achieving them.  But give me a chance to explain. 

I have to admit that like most entrepreneurs I'm an optimist.  As an optimist, I have two choices: 1) I can watch the news everyday and get depressed because everything sounds so negative, or 2)I can create my own reality, which is based on my inherent optimism.

If you had to pick a time to look for a job, you wouldn't pick the holiday season in a down economy when the press tells us that one--not even Starbucks--is hiring.  But it's an unfortunate fact that man of you out there--my daughter for one--are feeling the effects of the economic situation...

When it comes to business ideas, bigger is definitely better. Why? Let’s face it, starting any business is a risky proposition at best—the main risk being that you might fail. So, if you’re facing the possibility of failing, why not fail big so you learn a lot more!

Before you spend a lot of time and maybe money doing due diligence on your great business idea, I strongly recommend that you do a quick vetting of potential fatal flaws and big payoffs. Why? Remember when I talked about the Black Swan effect in a previous post, fatal flaws and big payoffs are less likely to occur than other types of events; but, when they do occur, they generally carry a huge impact on your business concept. Fatal flaws are those events or business design issues that will kill your business

Tis the season to be jolly. In fact, if you think about it, there is a lot to laugh about. Just when you thought you had seen it all, that things couldn’t sink any lower, along comes Illinois Governor Blogojevich and his senate seat folly – ya gotta love it. This is stuff you can’t make up. Seriously though, this depressing example of public service does serve to remind us why integrity and ethics in our business dealings matter.

In an earlier post (The plumber’s sink is always plugged), I talked about an experienced angel investor who totally blew his pitch for his business by making some very fundamental mistakes. I ended the post by saying “what you know can hurt you,” and it’s so true. The more you know about what you should do, the greater the chance you will mess up—

I have to thank Nassim Nicholas Taleb for writing one of the best business books I’ve read in a long time—The Black Swan: The Impact of the Highly Improbable. It has really changed the way I think about start-ups, success, failure, and the ubiquitous and annoying bell curve. Let me explain. Taleb’s core thesis is that the inventions, companies, and events that have the biggest impact on society, either positively or negatively, are not predictable. You can’t see them coming because there are no obvious signs announcing their arrival. In other words, you can’t plan for Black Swans (BS). You can’t, for example, come up with a business concept and an ingenious strategy to create the next Google (a Black Swan business). Even the founders of Google didn’t know when they started what impact their little search engine would have. After all, there were plenty of other search engines out there. Why did the funky, plain toast version offered by Google hit the mark? The truth is: BS technologies, inventions, and businesses—those that change the world—are rare events that hit us when we’re not looking and when we least expect them.

The other day I sat in on an angel investor screening where two entrepreneurs were pitching their businesses for capital.  If you ever get the opportunity to do that you should, because it’s a great learning experience.  As many times as I’ve heard people pitch their businesses and as many times as I’ve coached people in their preparation to pitch, I always either learned something new or reminded myself of something I had forgotten.  This session was an eye opener.

I don’t know about you but I’m a glass-half-full kind of person, so I find it troubling that everywhere you look today, the news seems to be negative—layoffs, tight credit, foreclosures – you name it, it’s there.  I would never deny the reality of these problems, but as an entrepreneur, I tend to see opportunity in any situation.