Some entrepreneurs are really good at describing their idea and vision in three minutes, some are not. Here is why it is important. Investors, employees, customers, and partners all need to "buy in" and get excited about your idea.

They will form an initial impression in three minutes or less. This first impression is the lens through which everything else is viewed.

I saw about 100 startups at the Launch Conference this week, and will see another 80 at the Demo Conference next week. The good ones stand out immediately. How can you get noticed? Don't expect to tell the whole story, just enough to get them curious and wanting to know more.

You need several different pitches. The demo pit / exhibit area pitch is 1 minute. The on stage pitch to the audience is 6 minutes. The investor meeting pitch is about 30 minutes. The key to an “elevator pitch” is to get them interested, answer the basic questions, and get to the next meeting. It is called the “elevator pitch” because you should be able to explain your new company idea to a prospective investor in the time it takes to ride an elevator to their floor. What should you cover?

The Problem – Start with the problem you are solving or the need you are filling. A real life story or scenario about the problem helps the investor understand the problem or need in personal terms, and agree that it is an interesting problem that needs fixing. Dave McClure says too many entrepreneurs start by talking about their solution and whiz bang technology. How they do it versus the problem they solve. If the investor is not interested in the problem…there is no way they will be interested in your solution. Once they are nodding their head about the problem, move on to the solution.

The Customer - Who is your target customer and how much will they pay for your product or service? Your target customer defines your market segment, size, competitors, and growth potential. Investors will "connect the dots" in a few seconds and decide if they are interested in hearing more.

Stop here for feedback - If the person you are talking to doesn't care about the problem you are solving, or doesn't identify with the customer you are targeting...stop and move on to the next prospect. You are wasting their time, and more importantly, your time. If they nod in agreement, tell them about your solution.

The Solution – Explain why your solution solves the problem, and why it is better than other solutions. We do X for Y, or we are the X (well known product) for the Y market. Again, don't explain how it works…but why it works. It might be cheaper, faster, smaller, easier, more enjoyable, or whatever. Don’t waste time explaining the technology, or flowcharting the process or value chain. Just explain why your solution solves the problem better than anything else.

The Competition – If there is no competition there probably isn’t a market. Competitors help the investor understand the problem, existing solutions, and potential size of the market. Even if you think you are inventing a new market, the problem has been there a long time, and people have figured out ways to solve it. Acknowledge that there are existing ways to partially solve the problem, and companies that have part of the solution, and why yours is better. Investors will be very nervous if there is no competition.

The Business Model - Who will pay? Is your solution a vitamin or a painkiller? Vitamins are nice to have, painkillers are a must have. There are some problems that no one will pay to solve. There are other problems where the one getting the benefit is not the party that pays the money. Sometimes there are multiple players in a value chain. Be very clear about where you are in the value chain, who will pay for your solution, and how much they will pay.

The Team – What experience do you and your team have starting companies or specific experience in this market segment? Are there any well known advisors or financial backers helping you? Do you have connections to people who can help you get your first customers?

The Close – We are solving a big problem, in a growing market, with a model that works, and a team that can execute. We need X dollars to reach Y milestone. We need investor partners to help us achieve this success. Show passion and confidence. Ask them to join the crusade. This is going to be The Next Big Thing.

Spend one minute on the problem, three minutes on the solution and demo, and 30 seconds each on the competition, model, team, and close. That is 6 minutes. Practice it 20 or 30 times. Every founder and early employee should be able to do the elevator pitch. Practice in front of friends, then practice in front of strangers that know nothing about your idea. Quiz them after to see if your message got through. Every potential new hire needs to buy into the story just like investors do. In many cases customers need to buy into the story too. This is important. Get it right and life will be much easier. Get it wrong…and you will get a NO in 6 minutes or less.

This post originally appeared on Don Dodge's blog.

Have you given any thought to leaving the "security" of a regular paycheck and going out on your own? If so, this blog post is for you. It is my not so humble opinion that working for yourself—owning your own business—is one of the greatest experiences a person can have. I equate it to the difference between living in your parents home and going out on your own and getting a place to live as a young adult. It is initially pretty frightening but the feeling of independence and growth is incredible and once you’ve done it successfully you cannot imagine going back to live with Mom and Dad.

I recognize that not everyone is cut out to start his or her own business or even work outside the structure of a corporate environment. The skills required to start and then successfully run a business are not always the same and require that you switch gears quite a bit.

I’ve collected a list of attributes that can help you determine if you are the kind of person that can start your own business. I’ve been networking with the owners of businesses of all shapes and sizes for many years and found quite a few common themes that I hope you will find valuable.

You are a good candidate to start a business because…

You are willing to take risks
This is the most obvious one – so obvious I hesitated including it on the list. Starting a business is a risky proposition. You need to be sure that you have set yourself up as much as possible to absorb the risk associated with starting a business, especially the financial issues. Only you can determine what level of risk is acceptable but a good rule of thumb is to have enough money or financial security squirreled away to last you through the time it would take to land a regular job. I’ve known people that didn’t feel comfortable until they had a year of living expenses and others that had virtually no savings, just a surplus of confidence. 

It may be possible for you to start your business while you are still employed by someone else – if so, that’s outstanding. Just make sure you are not going to violate any employment agreement you may have with your company. If you (like me) are a software engineer and currently gainfully employed, pay careful attention to your existing employment agreement if you have one. Many technology companies will lay claim to any invention made while an engineer is employed by them. If it’s at all possible without jeopardizing your job, let your boss know what you are doing. It is much easier to operate in the clear light of day.

You are an optimist (but a pragmatic one) 

If you are going into business by yourself it is critical that you are an optimist. Not someone that lives in a state of denial the entire time mind you—you have to be realistic—but someone that sees positive potential in most things. If you are constantly looking at why something will fail you are going to go out of business pretty quickly. It is the job of others to tell you why something can't be done and for you to prove them wrong.

This is not to say that you cannot have a pessimist as a partner. Very often having someone that balances out an optimist and throws a dose of reality on the situation creates a good balance.

You have a vision for your business and can share it with others
Having a good idea is one thing, being able to articulate it well and get others excited about it is another. If you are going to be the one that starts the business you have to be able to get others excited about it. Keep in mind that friends and family will usually love anything that you present to them. Get outside of your circle and comfort zone by asking people that would be potential customers or clients.

The list of people that you need to convince that you have a great business concept is quite long: potential employees, bankers, venture capitalists, partners, distributors, landlords, etc. All of these folks will want to hear from you why they should take a risk on your business.

I personally never felt comfortable doing large presentations to these types of groups. I’m great with one-on-ones and very small groups but my stress level rises dramatically when I’m doing a canned presentation in front of a group of people. I compensated for this by practicing my presentations over and over again until I could present the content on auto-pilot. Once that level was achieved I was able to riff during my presentations and ensure I was reading my audience and adjusting pace and humor to keep people engaged.

Because this is a personal weakness of mine I’ve had to work extra hard to overcome it.

You can accept criticism
As soon as you share your business idea outside of your familiar circle of friends and family you will be presented with criticism. Depending on the venue, that criticism may be blunt and even hurtful. You will have invested an incredible amount of time and energy into a concept and the last thing you want is for people to tear it down.

You must have the ability to not take criticism personally. It’s fine to be defensive if the critique is off the mark or fails to account for something obvious. Depending on the venue, people can have ulterior motives for their criticism that you will need to account for. Most criticism though is an opportunity to improve. If you find yourself defensive with all criticism you will likely alienate the very people that are trying to help you improve your business.

You can modify your lifestyle
When you are first starting out it is critical that you can adopt a frugal life style. While you were gainfully employed you may have eaten out often, taken nice vacations or bought a new car every couple of years. You need to be able to adjust that quickly to take up the slack and minimize your financial risk. That frugality will help you with the business as well – it’s all a mindset kind of deal.

A frugal life style will also lead to a closely monitored business.

You have a great relationship with your life partner
If you are living with someone or are married, it needs to be a strong relationship. Some people have successfully started and built up businesses while they were in a lousy relationship – the business became a sanctuary, something that kept them away from the person they didn’t really want to deal with anyway. Others have had a relatively fragile relationship fail when faced with the time commitment, stress and financial burden associated with a new business.

This one is very personal for me. I was blessed with a fantastic wife that supported me every step of the way. On the days I just felt like I couldn’t deal with it I had her to turn to. When I questioned why I was going through the painful process of starting my business I would look at the photos on my desk of my wife and three children. It was all the inspiration I needed to make it work.

If you are in a relationship you need to know if your partner is going to support you. It will not be all happiness and light mind you – my wife and I got into many heated debates on issues that were complicated by the stress of running the business. If however we had a defective relationship it likely would have failed.

You are a jack-of-all-trades
Have you ever been described or described yourself to others as a jack-of-all-trades? If so, that’s a good thing when starting a business. If you are starting the business by yourself then you are obviously the CEO, but until you get employees you will also have a couple more key titles:

• VP of Marketing: You need to develop and execute a plan to promote your product or service.
• VP of Sales: You have to develop a sales process and make it happen
• VP of Development / Production: Someone has to build your product or provide that service. That someone is you. Outsourcing it? You still have to manage it.
• VP of Support / Customer Service: You will need to deal with customer issues and resolve problems people have.
• VP of Finance / HR: Run your accounting software, pay the bills and manage any employees you may have.

Depending on the type of business you want, one person can pull off all of these roles and still lead a semi-normal life, though like anything else you need to be pretty good at them if you want it to be successful.

You get easily frustrated with bureaucracy
As companies grow larger they develop processes and systems to help them run more efficiently. Over time those processes evolve and change and can become less efficient. If you are working in a company and see all the places where processes can be improved or eliminated, you have a trait that is valuable in starting your own company. 

If you work for a company that is unwilling or unable to change an inefficient bureaucracy and it drives you nuts, you have some of the fuel required to power your business. Anger with the status quo is a powerful motivator.

You want financial independence
One day you look at your finances and realize that while you thought you were running hard in a race you are actually running on a treadmill. Between car payments, rent or a mortgage, living expenses, etc. you make a decent living but you are not advancing your lifestyle to your satisfaction. If you have children then it’s even more pronounced because you have their living expenses and education to worry about as well.

In my experience the best way to provide yourself with the opportunity for financial independence is to control your own destiny, and that means starting your own business. Not every business is destined to create great wealth for the person that starts it. Many people create life-style businesses that generate just enough revenue to pay the owners a good wage.

Whether you are creating a business with the intention of selling it to obtain wealth or you are creating a long term life-style business, either can provide you with financial independence.

You are patient and don’t give up easily
A critical characteristic for a person starting a business is persistence. You need to be able to face rejection and failure not as a personal thing but as a challenge to improve. A new business faces many obstacles that will tear you down and make you want to run screaming for the perceived safety of regular employment if you let them get to you. 

It’s also important to understand that some businesses take a very long time to succeed. We live in an age where things move so quickly—especially in the technology world—that a business that isn’t generating massive revenue or traffic in a short time is perceived as a failure. The reality is, many of the overnight successes that people see took years of build up and behind the scenes work before they got there.

You like to work really hard
The final attribute I’ll cover is your work ethic. If you want to build a successful business you have to have the capacity to work very, very hard. You will often hear people say that it’s not about working harder; it’s about working smarter. That mindset is great for employees that have well defined jobs but fails when it comes to a person starting a business. You have to work smarter AND harder because there is so much to do.

If you are a clock-punching kind of person then clearly you should not be starting a business, regardless of how insanely great your idea is. 

Making the decision to start a business is not one you should take lightly, however if you make a go of it I congratulate you. Regardless of the result of the business, the experience you will acquire will enrich you in ways few jobs can.

Contrary to popular opinion, Entrepreneurs are easily the worst at building successful businesses.

Entrepreneur – Wikipedia: “willing to accept a high level of personal, professional or financial risk to pursue opportunity. …in possession of an enterprise or venture.”

There are three basic business owner profiles:

1. The Market Focused owner (the Entrepreneur falls in this category)
2. The Systems Focused owner
3. The Product Focused owner

Market Focused owners are just that – focused on what the market wants. They poke around and find holes in the way customers are being served and create companies to fill that need. They’re usually not passionate about any particular product or service, and sometimes know little about the one they’ve just decided to stake their future on. They’re dreamers, visionaries, spontaneous, flexible, willing to take big risks, and understand that speed of execution is vital in starting and growing a business. Entrepreneurs are Market Focused owners.

They’re also more often than not terrible business people. Too often the entrepreneur is lifted up as the holy grail of how to be successful in business, and other business owners are taught to emulate them.

It’s not a good idea.

Market Focused owners need more outside help, are the worst at taking instruction, exhibit the most over-confidence, do the worst due diligence, and fail way more often than either of the other two owner profiles. When they succeed, they succeed big, usually by sheer luck and number of attempts. But just like the gambler, you only hear about that one big win. You never hear of the many losses that, in balance, make the entrepreneur the worst risk to bet your money on. Entrepreneurs are the business world’s big gamblers.

The Wikipedia definition is good – note that it doesn’t mention someone who is a great craftperson or artisan, or highly knowledgeable at making a product or delivering a service. Entrepreneurs are quite often not experts at all at what they’re hawking. They’re great at seeing the hole in the market, but their best bet is to hire someone else to patch the hole.

The carnage they leave behind can be appalling. At their worst, the entrepreneur is a dreamer who causes people to lose their entire life savings on future possibilities and well oiled get rich quick schemes that the entrepreneur is truly convinced is a “sure thing”.

At their best, a heavily Market Focused business owner understands how handicapped they are by their affinity for risk, their unwillingness to really master their craft, their desire to spread their companies too thin and do everything the market wants. The self-aware entrepreneur sees the clutter in their mind and on their desk, and their inability to finish an idea because they already have a newer and better one.

And this awareness leads them to put aside their inherent over-confidence and get help. When they finally get the Systems Focused and Product Focused owner profiles involved and get out of the way (entrepreneurs are classic control freaks), the possibility of success goes up big time.

Michael Gerber (E-Myth) and others correctly identified that most businesses are not started by entrepreneurs. But they then proceed to lift up the entrepreneur as the model for how the other profiles should do it. Good luck with that.

The Market Focused owner may have the most serious issues in building a business, but all three profiles are broken. There’s a fourth profile they all need to become that almost no one starts with – it’s call Business Owner, which is a healthy mix of the best from all three of the other profiles. But more on that at another time.

The purpose of this rant? To free up the overwhelming number of people who own businesses who think the holy grail is to emulate the entrepreneur. Trust me, it’s not something to be pursued. You’ll want to add some of their great strengths, but don’t drink the kool-aid and dive in wholesale in becoming one. It’s just not good for the economy (or for your pocket book, your spouse, your kids, your health…).

FYI – the next two weeks I won’t need to be nearly so hard on the other two profiles (Systems Focused and Product Focused) because they’re rarely so over-confident as the Market Focused owner. Fortunately very few business owners are actually Market Focused entrepreneurs. Be thankful if you’re not one of them, and if you are, get help focusing on Systems and Production so you can become a true Business Owner.

Entrepreneur Characteristics – The 5 “C’s” of Success

Mompreneur, dentist, franchisee, CEO, brick and mortar retailer, E-commerce Business Owner, Service Provider? How do you define yourself?

Merriam-Webster dictionary defines an entrepreneur as “one who organizes, manages, and assumes the risks of a business or enterprise.” That’s true, of course, but this definition doesn’t tell the whole story—namely the entrepreneur characteristics that define their success and, more importantly, the intrinsic drive it takes to achieve that success.

There are 5 entrepreneur characteristics that are common among anyone who strives to start and run his or her own business. These characteristics are found in entrepreneurs at any age, in any industry, and at any socioeconomic level.

The 5 “C’s” of entrepreneur characteristics are:
• Commitment: An entrepreneur has to be 100% committed to his or her idea, vision, product or service, and business strategy to achieve his or her goals. Call it dedication. Call it perseverance. By any name, commitment is one of those entrepreneur characteristics that embodies the daily drive to take another step closer to his or her dream, to stay focused, and to work tirelessly in the face of adversity.
• Confidence: Entrepreneur characteristics like confidence go hand-in-hand with commitment. Entrepreneurs have to believe in themselves and believe in what they’re doing. Whether it’s creating social change, inventing a new product, or improving a service, confidence is an entrepreneur characteristic that enables them to strive under pressure and be a strong leader.
• Creativity: Entrepreneurs are creative by nature. They have a knack for seeing things from a different perspective than most people, and then developing an inventive product or service to improve other people’s lives and businesses (and sometimes both). It’s said that entrepreneurs are born. If so, creativity is one of the innate entrepreneur characteristics that causes them to see the brick and imagine the building.
• Courage: An entrepreneur has to be courageous. After all, it’s scary to venture out on your own with little more than a dream and the passion to create something out of nothing. Courage is a characteristic of entrepreneurs that gives them the grit and conviction that success is possible if they never stop working towards their goals.
• Collaboration: Entrepreneurs are born leaders, but they also know they can’t do everything themselves. They see the big picture and bring others on board who share their vision and fulfill a key part of their business. Entrepreneur characteristics like leadership and collaboration enable them to beat their competition because everyone works as a team to achieve a specific goal.

While these are only five of the many entrepreneur characteristics, they are all critical for someone to carve their own path in business. Whether his or her desire is to make money or improve the lives of others (or both), he or she almost undoubtedly personifies the 5 “C’s” of entrepreneur characteristics.

Do these entrepreneur characteristics sound strangely familiar? Are you an entrepreneur that needs a jump-start in your business? We specialize in career coaching to help nurture these entrepreneur characteristics for those who hear the call of their own venture. We also support people in recognizing and pursuing other career paths when confusion sets in and they feel overwhelmed by what to do next. But then you probably knew that already.

Tags: baby boomer, babysitting, convenience store, encore career, long term unemployed, looking for work, networking, new business development, new grad, recently retired, starting over, unemployed, what do I want to do when I grow up?

Entrepreneurial hope is essential. It gets us over the hump and through the dip. There's a variety of this hope, though, that's far more damaging than helpful.

This is the hope of the magic lottery ticket.

A fledgling entrepreneur ambushes a venture capitalist who just appeared on a panel. "Excuse me," she says, then launches into a two, then six and eventually twenty minute pitch that will never (sorry, never) lead to the VC saying, "Great, here's a check for $2 million on your terms."

Or the fledgling author, the one who has been turned down by ten agents and then copies his manuscript and fedexes it to twenty large publishing houses--what is he hoping for, exactly? Perhaps he's hoping to win the magic lottery, to be the one piece of slush chosen out of a million (literally a million!) that goes on to be published and revered.

You deserve better than the dashed hopes of a magic lottery.

There's a hard work alternative to the magic lottery, one in which you can incrementally lay the groundwork and integrate into the system you say you want to work with. And yet instead of doing that work, our instinct is to demonize the person that wants to take away our ticket, to confuse the math of the situation (there are very few glass slippers available) with someone trying to slam the door in your faith/face.

You can either work yourself to point where you don't need the transom, or you can play a different game altogether, but throwing your stuff over the transom isn't worthy of the work you've done so far.

Starbucks didn't become Starbucks by getting discovered by Oprah Winfrey or being blessed by Warren Buffet when they only had a few stores. No, they plugged along. They raised bits of money here and there, flirted with disaster, added one store and then another, tweaked and measured and improved and repeated. Day by day, they dripped their way to success. No magic lottery.

What chance is there that Mark Cuban or Carlos Slim is going to agree to be your mentor, to open all doors and give you a shortcut to the top? Better, I think, to avoid wasting a moment of your time hoping for a fairy godmother. You're in a hurry and this is a dead end.

When someone encourages you to avoid the magic lottery, they're not criticizing your idea nor are they trying to shatter your faith or take away your hope. Instead, they're pointing out that shortcuts are rarely dependable (or particularly short) and that instead, perhaps, you should follow the longer, more deliberate, less magical path if you truly want to succeed.

If your business or your music or your art or your project is truly worth your energy and your passion, then don't sell it short by putting its future into a lottery ticket.

Here's another way to think about it: delight the audience you already have, amaze the customers you can already reach, dazzle the small investors who already trust you enough to listen to you. Take the permission you have and work your way up. Leaps look good in the movies, but in fact, success is mostly about finding a path and walking it one step at a time.

One good thing to come out of this recession has been a dramatic increase in the number of new businesses started in the US and around the world. According to a Kauffman foundation study, in 2009 the number of new businesses hit the highest level in 14 years, with  558,000 start-ups every single month in the US alone. Multiply that globally and the numbers are staggering. Why? Well in short, the recession. When people are forced to choose between looking for jobs that they have little faith exist and staying busy, many will choose the latter. And with the tools now available to so many households and individuals the costs of starting a business are perhaps lower than they have ever been before. You have a computer, right? A cell phone? A table at Starbucks? That minimal infrastructure is adequate for a huge number of new businesses and allows entrepreneurs to hang out their shingle quickly and cheaply, and to compete powerfully.

Interestingly, the Kauffman study showed that several demographic groups were even busier than the others in getting their businesses off the ground. People aged 55-64 increased their start-up activity in 2009 as did African Americans, typically two groups whose entrepreneurial activity is slower than the general population. Why would that be? Is it hope or desperation that is the driver for these groups? Studies have shown that these two groups tend to experience longer periods of unemployment; it’s just harder to find a job in recessionary times if you are African American or a middle-aged American. With limited choices, people tend to take matters into their own hands – they become “necessity entrepreneurs.” They take action, and the action often takes the form of a new business, consultancy, or self-employment; at the end of the day, though, the result is the same: another business is born, another person or persons employed, more tax revenue generated, and more creativity unleashed in the form of services, products, and work.

So as the economy grows and as the employment picture improves, what will happen to all of these new businesses, these “no choice but to do this” folks? Well studies have shown that the historical failure rate for new businesses is 50% over five years, but the businesses that do survive are the engines of job growth. And there is reason to think that these businesses will match or even better that trend: start-up costs are low, talent is readily available, and operating costs, like rent, are lower than they have been in a decade. Plus, the competition is equally challenged and this makes for a strategic opening in many industries that haven’t been competitive in many years. The combination of this fertile atmosphere, along with the higher actual numbers of new businesses combined, bodes well for the contribution this new generation of businesses will make to the economy, to innovation, and to peoples lives.

These startups are also a leading indicator of overall economic health. Remember, however small they are, new businesses still need to spend money: they need to raise capital or take on debt and that has an impact in the financial sector. They need to buy furniture, computers, and make other  capital expenditures. They not only need to buy office supplies and food, but they are also consumers of professional services like accounting, legal, and payroll and as they grow they need more services, more space, more transportation and more robust supply chains to sustain their growth. All of this combined has a trickle-down effect that impacts other  businesses, large and small, which must rise to meet the increased demand A virtuous cycle is created, and the benefits ultimately flow in the form of orders, receivables, and jobs. The risk (as always) lies with the new entrepreneurs, whether they have taken the plunge out of “necessity,” out of  desperation, or with the need and desire to create something new to the world. The benefits (as always) are meaningful to all of us, in the form of jobs, customers, and revenues for our own start-ups and small businesses.

Big-time entrepreneurs almost always look like big-time risk takers. Yet nothing could be further from the truth. While plenty go to great lengths to make their ventures succeed, spending their savings or going into debt to pursue their dream, they also tend to up their odds by systematically lowering their risks. “The experienced entrepreneurs learn that gambling is not the way to build a business,” says Saras Sarasvathy, a professor of entrepreneurship at the University of Virginia’s Darden School. In fact, when it comes to attacking problems — especially high-stakes decisions — the best entrepreneurs are downright conservative.

Take Leonard Shoen, the founder of U-Haul. Shoen had $5,000 to work with when, in 1945, he decided to launch a business renting trailers both in-town and one-way across the country. That was a fair amount for the time, but Shoen spent nearly all of it just buying and fixing up trailers he needed to get started around his home in Washington State. The problem was that for his plan to work, Shoen needed hundreds of trailers stationed across the country — a notion that looked foolish with that much money and no proven market.

But Shoen got creative as he went about figuring out ways to expand. To solve the problem of distributing the trucks across the country, he let the first wave of renters take the trailers for practically nothing on the agreement that they would establish franchise rental locations wherever they were going. He bought more trailers, but he sold them to employees, family members, friends, and investors who would then lease them back to Shoen’s company. That way the owners, not Shoen, were responsible for upkeep. Then, to set up the rental locations, Shoen leased unused parking spaces at gas stations and he then enlisted the station owners to manage the rental paperwork, making them partners in the business.

It was strategically brilliant. Shoen had put himself in the best possible spot by spreading the risk across so many people in so many locations. Had the whole thing flopped, Shoen would have been out his time and roughly the $5,000 he started with — money that Shoen decided up front he was willing to risk.

As a case study, U-Haul baffles business school students. Sarasvathy says that when she asks her students to write a business plan for U-Haul, despite knowing that the business is successful today, most of them conclude it’s just not feasible. The business requires the entrepreneur to sink too much money into assets that quickly lose their value, and there’s little that would prevent a wealthier competitor from swooping in and building the business better and faster. Even worse, at the time there was little proof that there was much of market. (Shoen determined there was a need after he tried to rent a trailer to move his belongings from Los Angeles to Portland, Ore. No one would rent him one — not exactly the kind of market research outside investors like to see).

The lessons Shoen’s story offers, Sarasvathy says, are valuable for anyone eager to make their venture work. Like many successful entrepreneurs, Shoen began by coming up with an amount of money he was willing to lose — something Sarasvathy calls the “affordable-loss principle.” It’s a simple but powerful concept, and certainly not the mark of a shoot-for-the-moon risk taker type. “By settling the question of what you’re willing to lose, you play the game more conservatively than it at first seems,” says Sarasvathy. “And you end up investing less than if you were blindly focused on the upside.”

Doing this is psychologically helpful as well, she says. When you identify the worst-case scenario — in Shoen’s case, losing $5,000 — you gain a certain amount of control in an otherwise uncertain situation. You can, after all, control how much you are willing to lose. It’s a key reason that most entrepreneurs — especially in this economy — argue that working for themselves is far less risky than working for a big company. To a large extent, they’re controlling their own destiny, and that makes life a lot less uncertain.

(U-Haul trailer photo courtesy of Flickr/Bravo Six Niner Delta, CC 2.0.)

Media Relations 101 for Your Startup

First off, you do not need a PR firm. The retainer is usually not worth it, especially for a young, growing startup because your product is still drastically changing and because your conversion rates are probably very low.

As a startup that is looking to innovate in your industry, it usually does not make any sense for you to allow someone else to communicate your vision. PR firms do not always get it. Even with stellar communication skills, only you and your core team really understand the message and the vision.

 

Danny Wong is the co-founder and lead evangelist of Blank Label, a provider of custom dress shirts. He has been featured in publications like ReadWriteWeb, FastCompany, ABCNews, FoxNews, BusinessWeek and more. He is also a 19-year-old evangelist and rockstar studying full-time at Bentley University.

If you are a first-timer at PR, start small so you do not burn any important bridges (but be aware that every bridge counts). Start pitching to small blogs and websites in your niche and occasionally take a shot at medium-sized blogs. Once you start feeling more comfortable with your email pitch, and are making decent traction with small blogs and websites, move onto pitching to medium-sized sites. Then, as you gain experience, and learn a bit more about tailoring your pitch to specific authors, you can move onto mass-media outlets that can really increase your exposure because of their tremendous reach.

Here are some pieces of advice that will get you featured more often.

Speak Their Language and be Concise

As in all communications practices, you want to make sure that your audience can understand what you are saying without thinking too much. Do not foolishly use inner-office jargon that no one else understands. Not to insult journalists, but pitch as if you were addressing a 14-year-old. Seriously. This manner of communication should be the same for everyone you talk to about your brand. You are not condescending them this way; you are allowing them to easily digest your message.

Make Some Friends

Sometimes it's good to build a relationship with a reporter before pitching them. In our digital age, this is much easier to do too since we have Twitter, Facebook and LinkedIn for interacting with new people. In fact, you can also leverage your secondary network (your network's network) to get in contact with writers. Knowing people that know people is a great way to get your foot in the door.

Always be Reading

Keep an eye out for relatable content or news, and pitch writers with a fresh angle since they are obviously interested in related subjects. Or, provide meaningful commentary (typically best with email) that can help kick-start your relationship with the writer through intellectual dialogue.

Indirectly Target Reporters

Sometimes it's not ideal to pitch directly to reporters. It might be better to target media outlets that the influentials are reading. If you know that Om Malik reads some small-time tech blog, you might want to get featured on that blog to get Om Malik's eyes on you without directly contacting him. When you finally do contact him, you will have higher visibility in his overflooded inbox because he has heard of you before.

Do Something Different

No one wants to talk about something that's been done before. What's your angle that makes you so special? Sure, you can do something similar to big businesses, but make sure there's also something distinctly different about what you do. Always be innovating and let people know that!

Do a Giveaway

Blogs and medium-sized websites love this. You are offering value to them and their readers because you are giving something away for free that the publisher and the audience does not have to pay for. This also serves as free publicity for you, so everyone wins. The publisher gets a new piece of content, the audience gets a free prize, and you get some eyes on your product and website. NOTE: This typically does not work on bigger publications or mass-media outlets because they are looking for newsworthy content, or sponsored posts.

Be Part of a Movement

Being part of a movement validates what you're doing as a business, and sometimes gives reporters more newsworthy content than just a solo feature of you because they can profile other businesses within the same space that are doing awesome things.

Have an Actionable Conclusion to Your Pitch

Do not just pitch your story and hope the recipient will email or call. Ask them their thoughts on the pitch, or prompt them to reply via email or call to further discuss the story.

Be Patient, but Persistent

This is very important. Sometimes it takes a while for a journalist to get back to you, and sometimes they forget to reply. I tend to follow up one to two weeks after emailing a journalist to see if they received my email and their thoughts on it. I've closed many more stories this way rather than trying to let my first email do all of the work. Even after you've had an interview or a briefing, it is important to follow up with your media contact until the story is live because it doesn't count unless the public sees it! One recent media hit took a month from initial pitch before being published live, and I've been nurturing one media lead I have had since December of 2009!

Do you have any other wisdoms on how startups can power their media relations? Feel free to add your tips in the comments below.

Photo by magicmarie.

Despite "collaboration" becoming increasingly accepted and valued in business, there are still those that remain hesitant about sharing information or resources and about working with others. It's still common to hear people say "I have developed a great tool, but I'm afraid that if I share it with anyone, they'll steal my idea."

You must overcome that fear of losing out on the glory and the profit and learn to work with others.

"Having a great idea is only 1% of what it takes to launch your startup," says Wayne Pope, managing director of the online collaboration tool Glasscubes. "The other 99% is execution."

And that execution will likely come from working with others, as chances are you aren't going to create your startup alone. Learning how to collaborate effectively can help you propel your great idea forward in ways that working independently could not possibly achieve.

As you move your great idea into a viable business, you want to reach out and work with people who can provide skills, knowledge and feedback along the way. And you want to work with these people effectively.

How to Collaborate

Even if your founding team is initially comprised of friends, colleagues, and people you know locally, it's likely you will want to implement some sort of online collaborative workplace so that you can all work together - whether it's in an office or remotely and whether it's in real-time or asynchronously.

We've written before about a number of great tools that can help facilitate online collaboration. But whichever tool you select, it's important to think about three main areas:

Communication: Despite the benefits email and instant-messaging have afforded us, they can be unwieldy to track and search. Having a centralized site for communication and for sharing files helps make sure everyone is informed. It's also important to make sure that everyone has a voice in discussions, if not decisions.

Accountability: If you are working with others, be sure to clearly assign tasks and deadlines. This is particularly important in early stages of a startup, when staff is small and people are wearing a number of hats. If you are juggling tasks, it's easy to lose track of your assignment. It's useful therefore to have a tool where tasks can be recorded and follow-through tracked.

Agility: Having an online collaborative tool shouldn't replace regular "check-ins." Daily "scrum" meetings can ensure that you can respond nimbly and that projects and processes move forward.

Technology has facilitated real-time communication, but just because we can easily share information doesn't mean we are necessarily collaborating productively when we do so.

And while finding an online tool is an important first step, collaboration requires more than just finding the right technology. It demands moving beyond the fear of losing control and losing credit so that you can, as we were told as kids, "play well with others."

It is becoming alarmingly apparent that Foursquare is strongly considering a sale to Yahoo. As of the end of last week they had put the venture capitalists vying for their attention on ice. Those VCs happily provided term sheets valuing the company at $80 million or so. But in the meantime, Yahoo and maybe others expressed interest in the company, and are reportedly offering way above that $80 million.

There are so many reasons why this deal shouldn’t happen. Here are just a few:

1. It’s bad for Yahoo: Yahoo’s senior team is grasping at straws, and they desperately want to find a way to stay relevant. But this is not it. What the heck is Yahoo going to do with Foursquare that will somehow turn around their business? Absolutely nothing, that’s what. M&A for PR purposes is not what savvy executive teams do. Whatever tech cred they think they’ll get by buying Foursquare is in their imagination.

2. Yahoo is a horrendous choice for Foursquare. It’s where startups go to die. They’ve bought so many companies that were so promising, only to see them wither on the vine. And the founders always leave in disgust (see Flickr, Delicious and the rest in the left sidebar on their CrunchBase page – how many of these were successful?). And sometimes they buy companies just to shut them down entirely a year later. See Yahoo Kills Maven: From Acquisition To Deadpool In 17 Months Try to imagine what Facebook would be today if Yahoo had successfully acquired them in 2006.

3. You only sell now if you think your business doesn’t have legs. Aardvark did it because of very slow user growth and the founders got nervous. They were in a similar situation at Foursquare – lots of VCs ready to put in money at a great valuation, but they took the sale to Google instead. Now we’ll never know what Aardvark could have become had it stayed independent. Guys like Facebook and Twitter stayed independent despite outrageous acquisition offers. If the Foursquare team believes in their product, they should stay in the game.

4. The Dodgeball/Google debacle should have given founder Dennis Crowley enough of a taste of what happens to most companies when they get acquired. Dennis, remember when you wrote this – “It’s no real secret that Google wasn’t supporting dodgeball the way we expected. The whole experience was incredibly frustrating for us – especially as we couldn’t convince them that dodgeball was worth engineering resources, leaving us to watch as other startups got to innovate in the mobile + social space.” You sold your startup too soon once before. Why do it again now?

5. You can hedge. Lots of startups take money off the table in a venture round instead of selling outright. The WordPress guys did it, for example. The Aardvark team had the option of doing it. You can ask your VCs to redo their term sheets and double the amount raised. Take half off the table and you, your children and their children will never want for anything material in their lives, even if Foursquare goes south right afterwards.

Foursquare has a destiny. It may be to go out of business. It may be to go public and be a huge force in our culture. It may be something in between. But selling out now is like dropping out of college to take up drugs. Whatever you would have become, that isn’t what you’ll become once you sell out to Yahoo. Call Caterina from Flickr and ask her if she wishes she hadn’t sold to Yahoo. Call Joshua Schachter from Delicious and ask him the same thing. My guess is both will privately tell you NFW would they have sold to Yahoo knowing what they were stepping into.

Facebook and Twitter hitting the geo space must be a scary thing for a small startup to contemplate. But there’s real momentum and that intangible buzz behind your product right now. Play this out. In ten years, you’ll be glad you did. Unless you’re broke then because Foursquare failed, of course, and bitter that you didn’t take the money from Yahoo when it was offered. But there’s a reason why you became an entrepreneur and didn’t just stay a mid level developer grunt at a variety of large organizations. You have the fire to change the world. So go do it.