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10 Things Every Startup Needs to Know

Phew, I can’t believe it’s been almost a year since I’ve written a blog. It’s been an incredible ride.

Back in October of 2011 I was accepted into Startup Chile – undoubtedly the best darn incubator/ “ultra-angel investor” on the planet. If you get in, you get $40,000 USD – equity free – that means they want no equity in your startup. If you agree, you simply need to go live in Chile for six months. The hope is that your entrepreneurial mojo will rub off on Chileans. And, it works. I’ve seen it work. In fact, I’ve had people whom I hired go out and start their own business.

So, if you you’re even remotely thinking of starting something apply to Startup Chile.

And, yes, I’ve been here for over a year because things are going well for my startup – Kedzoh – and I’ve got my team here plus great traction with customers and resellers.

OK, enough  of the travelogue.

Here are 10 things I’ve learned in the past year.

  1. Revenues are king.Your idea doesn’t mean shit until you have paying customers.
  2. Set goals. You must set a few goals for each year if you are going to make progress and achieve anything – I would set three.  My goals for the first year – all of which I achieved – were: 1) build the damn thing, 2) get traction with customers and 3) get more funding.
  3. Stretch resources. When you have only a half of tank of gasoline you figure out ways to make it go as far as 5 tanks full of gasoline. Yep, $40,000 doesn’t sound like much in the US but it goes a long way outside the US. Figure out how to conserve cash early – go global on day one with your resources. Yes, it will be frustrating but you’ll go a lot further.
  4. Adapt to the world. Working with other people from around the globe requires you to adapt. YOU MUST CHANGE! Don’t expect that they will. Adapt.
  5. Remember to take a day off. It can be in the middle of the week. It doesn’t matter. Just rest. You need your energy. This can be very hard to do but your health and the health of your business requires this. This is not an option. (This and the next suggestion are probably the most ignored.)
  6. Don’t forget your family and friends. You need them more than you realize. It’s lonely being an entrepreneur – even with a team. You need a support system that has nothing to do with business.
  7. Go to every damn startup event were you’ll meet other entrepreneurs. I’m not talking about the Meetups where people go who want to be entrepreneurs, I mean get-togethers for and by entrepreneurs. I was (am) in an incubator and am constantly meeting other entrepreneurs. There’s so much you can learn from other entrepreneurs. Don’t pass up on this… It’s how I found out about my second funding source…
  8. L’audace, toujour l’audace. This has to be your creed.
  9. Delegate. If you have something that’s going to work, get ready to delegate, because sooner or later – when it does work and it’s growing – you’ll have to delegate. So, start doing it earlier. Your people will appreciate it.
  10. Hire good people. Sure you want people that are talented but you want that X factor. Only you can determine what that X quality is for your organization. For me, the X factor is people with heart, with passion, with a burning desire to do something different with their lives. I want people who believe they can make a difference – because at Kedzoh we are making a difference!

Understanding The World – Part I – 5 Tips on How to Find International Opportunities

Is this your next car?

In the past I’ve written more than a few blogs about the opportunities that exist for non-US entrepreneurs in the United States.

Today, I’m writing about the vast opportunities open to all entrepreneurs worldwide. They just need to know how to look. So here are 5 tips on how to look for and spot international opportunities.

  1. Look at which countries are hot. Brazil and China for sure, but what about places like Bangladesh and Nigeria? I know of one enterprising American entrepreneur that’s selling cell phones in Angola. And I have a friend who moved to Bogota, Columbia several years ago when it wasn’t exactly a tourist destination. And another friend that just purchased the cellular phone rights for an entire country. OK, so there’s some risk. But, heck there’s also some outsized returns. How many competitors do you think these people encountered? Not many, that’s for sure. So, what’s the moral of the story? Think outside the country.
  2. Keep your eyes open. One of my favorite examples is the US school teacher that was traveling with her class of elementary school children in Europe. And, what were the little rascals buying? Gummy bears! What did she do? She secured the rights to the US market and made a tidy sum selling something that had never been sold in the US. OK, so Europe isn’t exactly on the super fast growing economies list. But, that’s not the point. The point is: travel with open eyes and you will see the opportunities. Go back to your home country and start selling that product!
  3. Think Poor. When you’ve grown up with everything this one is difficult: think poor. Ask yourself, how would I make due with their income? What would I be willing to buy with the little money I had? I had a French teacher, a wonderful lady, that used to teach in Cameroon and one of the things she sold quite succesfully to the locals was a plain straw hat that had a mirror on the inside. Who would have thought? She did. And, what did she once do? She gave a free hat to a big chief and in return he gave her a carved elephant tusk. Ok, so that’s not IPO material. But, it’s a start and if you don’t start you don’t get anywhere.
  4. Think Poorer. You say, how can really poor people possibly afford anything? Well they can’t. You have to come up with completely new products and ideas for those markets. After all, most of the products in the developed world are made somewhere else so you need to look elsewhere for ideas. Peel the orange all the way back and invent something new. One of my favorite stories, is the American entrepreneur that moved to China to sell cosmetics to the Chinese masses. Well, lipstick can be pretty expensive. But her solution was ingenious. She was going to sell miniature lipsticks. Like those mini-bottles you find in hotel room bars. Just a small version of the original. I’m generally not a big fan of just make it smaller to make it affordable but in this case it was the right approach. (More about how to develop for the non-US market in a future blog). And…
  5.  Think local. So what do you do if you need a shovel to farm but you can’t afford shoes? Ever try pushing your naked foot against the blade of a shovle to push it into the ground. Tough right? More, like impossible. So what did some enterprising entrepreneur do? They put a step on the shovle so it formed a “T” and the farmer could then push down with their naked foot onto the top of the “T” and not cut the bottom of their foot. A very simple and elegant solution. OK, so that’s not exactly a large market. No it’s not, but depending on what you’re trying to do (i.e. do good) it could be the perfect solution. The point is that even if you want to make money (while doing good I assume) you have to adapt locally?

So, as they say, when in Sri Lanka, do like the Sri Lankans and all roads will lead to Beiing.

Dear Jeff Bezos, I owe you an apology.

Dear Jeff Bezos,

I owe you an apology. When the iPad first came out in April 2010 I taunted you and told you that the Kindle had seen it’s last days. I might have even said a few other nasty things too. At the time, I just couldn’t understand how a retailer could even begin to understand something like a tablet. And, now you’ve gone and proved me wrong.

I purchased a Kindle Fire for Christmas. I was curious and frankly all the bad press you were getting about the Fire made me wonder… why does everyone hate Jeff? Could it be that laugh? So, I just had to try the Fire Kindle.

WOW! Sure I’m impressed by the product. But, what’s really impressive and what everyone else is missing is that you practically reinvented the Kindle from May 2010 to November 2011 when you began shipping Kindle Fires to customers. That tells me that you’re not a retailer. Sure you’ll say: but what about EC2? Yeah, I know, but it’s not like you can actually see and touch EC2, it’s just a cloud. With the Fire I can actually touch and see what you’ve done. And what you’ve done is learn how to design and launch a “consumer” product in a little over a year. You had probably been working on it before, so let’s round it up to 2 years. Impressive for sure; but this achievement comes in second to my next point.

What’s truly impressive, to me, is that you learned a lesson or two from Steve Jobs about controlling the entire process. So now you’re on your way to controlling the delivery vehicle (the Fire) and the content (with Amazon). It’s no small fact that one can only access the app store on Amazon and not the Android Market. – Amazon is much cleaner, better curated and a more fun place to shop. In short, you’ve crafted the entire consumer experience. You get it! And sorry Serge and Larry, you don’t!

And, you did something very slick from both a technology point of view and a branding point of view. You build the Kindle based on Android but no where can one find any mention of the Fire being an Android device except in some technical papers. None of the reviews or reports about the Fire even mention Android. So you’ve simply branded the technology as your own. Right on! Why put someone else’s name on your product – that would be like saying “Powered by Intel” – great for the other guy, not so great for your own brand. So bravo! Job well done (no pun intended).

Well, I guess I’ve eaten enough crow for today. I personally learned a great deal from seeing how you’ve made yourself (excuse me… how you’ve made Amazon) into a personal delivery and content consumption platform. This is the new vertical integration and it’s cool ’cause it works so nicely. Which isn’t something I can say about Android, but that’s a letter for another day.

So, Jeff, thanks. Keep up the good work. I’ve got to get back to reading my Steve Jobs Biography on the Fire. If you don’t already have a copy click here to purchase a copy on Amazon :).

Sincerely,
Patrick

 

 

Thank You Steve!

 

 

 

 

In Memorium

February 24, 1955 – October 5, 2011

American Censorship Day – Be Very Afraid!

 

 

On November 16th the US Congress will hold hearings on the first American Internet censorship system. This bill can pass. If it does the Internet and free speech will never be the same.

It’s your Internet don’t let them take it away!

Click here http://www.americancensorship.org/# to send a message to the US Congress and express your opposition to this piece of legislation.

If you’re coming from outside the US and think this does not concern you. Think again. Many governments follow the lead of the US and yours could be next. Don’t let this happen in your country.

Act now!

Would You Hire Steve Jobs?

We’ve all heard that Steve Jobs, the iconic CEO of Apple is stepping down (or up) and will remain at Apple as Chairman of the Board and that Tim Cook will take over day-to-day duties as CEO.

As a result, there’s lots of talk these days about talent and whether we’re likely to see another Steve Jobs anytime soon. After all, how many technology CEO’s can you think of that would think much less say: “A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. The broader one’s understanding of the human experience, the better design we will have”.

So, let’s imagine that you’re the CEO of a hot tech company, real cutting edge and you just got funded and are on a hiring blitz. You have a candidate named Steve Jobs in front of you. Let’s imagine what would happen.

You: So tell me about yourself.
Steve: Well, I dropped out of college after one semester and went to India and became a Buddhist. That’s why I’m wearing these robes right now. They help me think different.

You: Hmmmm. Do you have any other training?
Steve: Yeah, I audited this really cool course on calligraphy and I think it’s going to have a huge impact on the way people use technology one day. I don’t know how yet, but I just know it.

You: Ah, ha, right. Did you take any technology courses?
Steve: Well, I hung out after high school at HP and listened to a bunch of lectures. But they don’t really know what they’re talking about. Matter of fact, I think they’ll eventually get out of the computer business completely one day.

You: Right. Now, we’re pretty enlightened here but it says on your social media page that you took LSD. Would you like to comment on that?
Steve: Its one of the two or three most important things I’ve done in my life. You see, altered perceptions are what permit a finer connection to the customer experience. It’s the groove. If you can’t grok the customer and what they’re feeling then you have nothing. It’s the void. That’s why I’m going to wear black slacks and black turtle necks all the time some day – to remind me of that.

You: I see. Now our investors want us to do really well. How do you feel about that?
Steve: Being the richest man in the cemetery doesn’t matter to me.

You: We’ll, is there anything else maybe you’d like to add that might make you qualified to join us?
Steve: I’m an orphan, my biological dad eventually married my biological mom but they had already given me away – it’s complicated. And, my dad’s an Arab Muslim. It’s all made me who I am – I think different.

You: Yes, indeed you do. Well, thank you for coming in. We’ll let you know.

So I ask you, how can we expect to have more Steve Jobs unless they rise to the top themselves? Because I sincerely doubt there are many companies that are capable of hiring based on the quality of the thinking a person brings to the table rather than the qualifications they bring on paper.

What do you think?

Biz Dev – Part III – Why No Revenues is Better

Foreigners are different from you and me. It doesn’t matter if you are Dutch, Chinese or American; your neighbor in the country next door is different. Europeans have this funny notion that a company needs to have revenues in order to have value. Americans have this funny notion that a company doesn’t need revenues to have value. Yes, we’re all different. But, if you’re living in Europe and have no revenues your neighbors’ (e.g. American) way of looking at companies – all at once – becomes attractive.

So what makes a no revenue company attractive? Customers! Lots and lots and lots of customers. So many new users each day or month that it becomes difficult to keep track of just how fast the company is growing.

So what, you say. Well, if you’re a US company with hyper-growth (e.g. think Twitter, Foursquare, Facebook) the  venture capitalists and angel investors in America will be throwing money at you.

If you’re based in Europe, you’ll be hard pressed to find a VC or angel investor who “get’s it”. Yes, “get’s it” is only now coming to Europe.

Here’s how it works. Venture capitalists in the US use a rough estimate of $2.00 in revenue per user per year (that’s two dollars) as a target for such hyper-growth companies (See this article). And, if you apply a multiple of 20X; then that user is worth $40 (That’s forty dollars!). And, if you have a million users, you have $40,000,000 in value. [I’m simplifying; but we’re looking at the “order of magnitude here” not fifth decimal point accuracy so put away your slide rule.] Therefore, if you’re investing when there are one million users and next year there will be two million users your investment will of course double. But what if you have 3x, 4x or 5x more users? If you’ve got a company on exponential growth, this isn’t out of the question. So even a $240 million investment at a $15 billion valuation (e.g. What Microsoft invested in Facebook early on), starts looking really good now that Facebook has over 750 million users and a valuation north of $70 Billion.

Let’s look at a company like Vente-Privee founded in 2001 in France. They were the pioneers of flash sales. They had hyper-growth. What did they do? They waited 10 years until a bunch of me too competitors had popped up in the US before even coming here. They just did a deal with American Express and are now launching in the US but hey, with a bucket full of cash, they could have come here 10 years ago. So how much value did they leave on the table because they couldn’t (or wouldn’t) take advantage of their hyper-growth? Billions of value lost.

Yeah, I know. Everyone’s not Facebook. But, there’s lots of companies with smaller numbers that are still impressive. Look at Evernote, steady, sure upward growth. Just a matter a time before they realize their full value for their investors.

So if you have company that’s adding users like crazy (after you give me a call) consider that if you’re in Europe your greatest returns may be in getting US investors to invest in your company so you can realize the value as quickly as possible before someone copies your idea and takes all that value away; unless of course you can find a European investor and VC who “get’s it”.

Biz Dev – Part II – 3 Business Development Tips For Success

Let’s recap my last post. A sale happens when marketing, sales and business development  combine into one lean machine… And business development is a fancy term for when you get your butt out of the office and start knocking on a customer’s door.

So here are three business development tips for you to use:

  1. Just F’ing do it (JFDI) – the easy part. You’d be amazed at how many don’t do it or get it. The VERY biggest client that I ever imagined or anyone else imagined of landing happened like this: “Hello, my name is Patrick Kedziora and I’d like to speak with Henry Kravis please”.  For those of you who don’t know who he is; he is the Sergey Brin, Bill Gates, and Steve Jobs of Wall Street – He’s one of the senior partners at the Private Equity firm of KKR – the world’s largest PE firm for many years and made famous for buying RJR Nabisco. And what did I use? A telephone. No, not Skype. Just a POTS line!
  2. Have something compelling to offer. Have something your client wants. “Yes, hello Henry, nice to meet you. I have some smart (e.g. risk adverse) money to invest and I like what you’re doing. Let’s meet and do some business”. Oh, you say… money… anyone can give away money. Well you try it. Have you looked at what money looks like? It’s green. It doesn’t matter who’s selling it. It all looks the same. So how do you differentiate yourself from the others? You need to know what your customer wants. And, it’s not more money. There’s lots of that around – even today. What they want to know is: are you going to be responsive to their needs, are you going to be there when they need you and are you going to leave them the minute something goes rocky in the relationship. Sound familiar? It should. It’s called relationship building – the same in life as in business.
  3. Just F‘ing do it (JFDI) – the hard part. Yep, so you thought getting in the door would be the impossible part. Sure it was hard. But, now they’ve met you. You told them what you could do for them. They said Yes, Yes, Yes, let’s do it now. And now, you’ve got to go back to your office, your team, your boss or your board and you have to actually make it happen. It’s nice when you’ve already done it before. If you’re a startup everything you’re doing you’ve never done before. In my case, I had no idea if my board would approve such an investment. You’ve got to remember, this is way before anyone heard of Henry or even knew what a PE firm was. But damn it, I knew it was a great piece of business and I was going to convince my board that this would make them money (’cause sometimes you gotta sell the client and your organization). And yes, I got everyone involved, I got our CEO to meet Henry and George and Jerry and what happened?… I got to invest in some of the most lucrative banking deals ever. Why? Because of one phone call. (I’ll tell you how I even thought to call KKR some other day – it’s another thing you’ll need to know).

So there you have it. Simple huh? 1) make the f’ring phone call, 2) have something the client wants and 3) actually deliver on what you said you’d deliver. That’s right, sounds simple but hey that’s the fun of having the rubber hit the road. ‘Cause when you get it right you can hear the screeching rubber and smell the fumes and feel the sucker hit 100 in under 5 seconds and feel your back slammed into the back seat from the acceleration. Now, that’s what I call business development!

[See the above video by Claude LeLouch. Warning: do not attempt this at home. This [the above commentary 🙂 and the video] were completed by a professional driver on a public road.  The film was actually banned in France. If you see it you’ll know why. Every time I go to Paris I dream of doing this! This is business development at its best! Controlled, focused, goal driven and with an objective in mind and pivoting and adjusting all the time.] [Note: March 29th, 2013 The original link showed the entire 8 minute film. YouTube pulled the link because of copyright issues. If you know what you’re doing you should be able to find the original online in about 10 seconds… Take the time, it’s well worth it].

 

Biz Dev – Part I – Know Where You’re Going or At Least Move!

Whether you’re European, Asian, American, Latin American, or African (what’s the stylistic way of including Australia and the South Pacific in such a list? But, I digress.). There’s only one thing on your mind. And no for you guys out there it’s not that…. it’s the other thing… MONEY. That’s what you want! More of it. More revenues, more profits. More, more, more.

What that takes (besides a great product, great customer relations, etc, etc, etc.) is sales. Sales is where the rubber hits the road. Sales is where the strong get separated from the weak. Sales is when a customer says YES, YES, YES, I want your product! But, so many fail at sales. And it doesn’t matter what you call it: some say “to-ma-toe”, some say “toe-may-toe”. Some say marketing, some say sales, some say business development. The sale happens where these three come together. Your marketing is the physical manifestation of your strategy; it’s the web site, brochures, videos and ads. Sales is the stuff inside the web site, brochures, videos and and ads that gives customers a compelling want to purchase from you. And, business development, we’ll that’s a fancy term for when you get your butt out of the office and start knocking on a customer’s door.

This is part one – stay tuned for part two next week where I show you how to kick some butt and part three in two weeks where I’ll talk about something that comes un-naturally: growing your business without revenues.

In the mean time, here’s some homework. Watch this video by Claude LeLouche. Besides being cool – what can you learn from it about business development? I’ll give you one clue: It was banned by the French government for many years. Watch it and find out why.

Click on the image to view the video!

Route map is from http://virtualglobetrotting.com

 

New Patent Law Embraces First to File, un-American July 4th

[Note: On September 8th, 2011 the Senate passed  89-9 to approve the American Invents Act (H.R. 1249). On September 16th, 2011 President Obama signed it and the patent office immediately began to implement it.]

Today is the 4th of July when Americans celebrate so many wondrous things. One thing we won’t be celebrating is the new Patent Law that recently passed the House [and which is expected to pass in the Senate] and which changes a very key element of current patent law which granted a patent to the person who was “First to Invent” something in their garage to the person (read company) that was “First to File” the patent at the patent office. I’m hoping that the President won’t sign this into law. It’s an insult to all inventors, tinkerers and all that we hold dear – the lone person working in their garage to come up with something that can transform the world. Where was the Venture Capital industry on this one?

To add further insult to injury, this is coming on the heels of a whole lot of hooplah surrounding the launch of Change the Equation a major push to re-invigorate science education and innovation in America. Do you really think we’re that stupid? How long will it take some high school inventor to figure out that the game is stacked against them? And, this is supposed to provide our next generation with hope? You’ve got to be kidding!

Sure, I understand the argument that this will put our legal system in line with other countries like Canada and Europe. But, when did it become American to be in line with anybody?

Let’s just consider this from a common sense point of view (Thomas Paine where are you when we need you?). You’re in you’re favorite chair and you think why don’t I go to the garage and invent that new mouse trap. You think a moment and you say “ah, heck even if I invent it I don’t have the money to file a patent now, someone will just steal my idea and file the patent first and I’ll have nothing, so why don’t I just sit here in the my chair and do nothing”. A sad day in America indeed.

So, as they say in French detective novels “Chercher la femme” – “look for the woman” or the person most likely to benefit. Is that the lone inventor? No! It’s those that can afford to pay the patent filing fee. It’s the established companies that benefit. As the New York Times reported “The change in the application system was favored by the large technology and pharmaceutical companies.” There is no more underdog. Simply: the fireworks of innovation are over, dossed in a bucket of legal water and special interests.

There is one small hope though, and that is that some legal scholars think this might be unconstitutional (see here and here). I hope and pray that it is true ’cause that would greatly rekindle my faith in an America where one can invent in one’s garage and build a business from the ground up.