Category Archives: Entrepreneurship

Fighter Pilots and Entrepreneurs – what they need to have in common

Serial tech startup rock star, small business owner, consultant, church plant pastor – doesn’t matter. We’re all entrepreneurs. While we’re certainly wired differently and may start and run different ventures, we’re all part of the same species.

So we share the same challenges – like how to deal effectively with stress.

That’s why we’re currently studying how stress affects the entrepreneur’s decision-making process and how it impacts the outcome of those decisions. Each of us responds differently under stress: Some freeze, some shoot from the hip, others take a step back to get more information… regardless of how you respond, stress definitely affects how effectively you make decisions.

Here’s the main problem: High stress decision-making comes with the territory of being an entrepreneur. But there isn’t a training ground for how to make those decisions under stress – at least not yet.

I first started thinking about high stress decision-making during a Starbucks meeting with Essan Soobratty, a brilliant, articulate, and seasoned trader working here in Chicago. He described the massive amount of research done on how elite, high risk-taking careers like hedge fund traders, elite military forces, rescue personnel, and fighter pilots make decisions.

He helped me connect an important dot that will have a huge impact on entrepreneurs in the future.

Here goes…

The primary job requirement in high risk-taking professions is the ability to perform in predictable and repeatable ways even while experiencing inhumane levels of stress.

  • Traders make high-stress decisions (often within seconds) while putting millions and billions of dollars at risk.
  • Fighter pilots endure tremendous amounts of physical and psychological stress while making split-second decisions that impact lives.
  • Elite forces like firemen, SWAT officers, Navy SEALS and Army Rangers train for countless hours to simulate the incredible amount of pressure they face in real-life engagements.

    • Without significant amounts of vetting, selection, development, and consistent, ongoing training, these individuals will make the wrong decisions – and at a tremendous cost:

    Imagine the consequences of a firefighter who steps into a five-alarm fire after a weekend of initial training.

    Or worse yet, a sub-standard Navy SEAL tasked with taking on a terrorist compound halfway around the world while protecting his team.

    Or imagine being an emergency room physician dealing with multiple high-risk patients within a 10-minute window and making life-changing decisions with very little information on hand.

    Expertise, competence, experience and confidence are everything in those situations.

    Now imagine being a first-time entrepreneur facing a major financial, human capital or legal setback who must make a timely decision – with no preparation, training, or experience.

    The outcome could be devastating.

    And usually is.

    Which leads us to a question I continue to pose to the entrepreneurial eco-system:

    “Why is the frustration and failure rate in entrepreneurship stagnant or getting worse despite massive improvements in access to information and support?”

    Part 1 of the answer is definitely Entrepreneurial DNA; people who select the wrong businesses, run them incorrectly, and engage with people, providers and insight not optimal for who they really are.

    It is becoming apparent to me that Part 2 of the answer is a total and complete lack of proper simulation/pre-launch training to prepare the entrepreneur (or budding entrepreneur) to make high-stress, split-second decisions in a cool, composed, and predictable manner – just like a fighter pilot.

    If elite forces, emergency room physicians, hedge fund traders, and fighter pilots benefit from high-stress cognitive training – so can entrepreneurs.

    We’re working hard this summer at BPI to build the ultimate entrepreneurship simulator to allow entrepreneurs from every industry and walk of life to step in and build expertise and competence. The predictable kind of expertise!

    And we’re looking for experts, researchers, technologists and guinea pigs to help us with this massive initiative.

    Feel free to toss yourself in the fire with us if you’re up for it. You’ll learn a lot – and I promise it will be fun!

    Event Reflections…

    Experiencing an “Aha!” moment is really fun, especially when you know one is coming – and when that moment leads to a breakthrough.

    Last week I presented the concepts of Entrepreneurial DNA and BOSI to a group of fifty folks in Chicago. Participants included a great mix of entrepreneurs, community leaders, people from the small business development and economic development agencies.

    I started by presenting the BOSI Quadrant, which allowed everyone to quickly identify individual entrepreneurial styles and traits – the “Aha!” moment. Then we split into four groups, each DNA type gathering at a different table hosted by a BOSI partner.

    For participants “Aha!” became a breakthrough event for a number of reasons:

    1. Each entrepreneur spent quality time with people they could truly relate to: People who share their strengths, weaknesses and frustrations. They no longer felt alone, knowing others felt the same joys and pains in their business lives. There was an instant connection amongst each group, a connection that is very empowering.

    2. Each entrepreneur shared his or her story in a very different way. During most “Tell us about yourself and your business” roundtable discussions, elevator pitches dominate the conversation as each entrepreneur tries to “sell” others. (After all, isn’t elevator pitching what we’re told to do?) In this case, each group shared an instant connection: Since we had already discussed the strengths and weaknesses of their particular DNA, they instead dove headfirst into discussing their challenges and needs. People spoke with a level of authenticity rarely seen at group events.

    Each table quickly built a real sense of community, which is my hope for the BOSI online community as well – we can all speak with greater authenticity and build stronger communities when we set aside our masks.

    3. Connections were much more meaningful. When entrepreneurs at the table asked each other for their business cards, I noticed they didn’t take the usual “grab and stash” approach. Instead, they made a “grab, read carefully, make notes on the card and then carefully place in a safe location” exchange of cards. Compared to the typical business card exchange, I feel sure stronger business alliances and more commerce will result.

    4. Learning was richer. I personally led the table of Innovator DNA entrepreneurs. Because we had like DNA, we didn’t waste time on irrelevant subjects. We were immediately tackled issues Innovator DNA entrepreneurs face. We spoke in detail about human capital challenges, business management frustrations, and even overcoming personal obstacles. We accomplished (and gained) more in forty-five minutes than an eight-hour seminar with a so-called “guru” preaching a one-size-fits-all approach from the front of the room.

    5. The larger group dynamic was… dynamic! When we regrouped, it was amazing to see the lightning bolts of energy flash as entrepreneurs compared their BOSI Profiles and table experiences with each other. The environment was energetic and electric. Why? For the first time, these entrepreneurs were recognized for what they really are – individuals. Individuals with unique traits who no longer have to “compete” with each other in areas where they were gifted or weak. Instead, collaboration ruled the day, with a spirit of, “Hey, if you’re great at selling and I’m great at process, maybe we can help each other out,” filling the room.

    All in all, this was the first of what I hope will be thousands of events around the world where entrepreneurs meet, learn, and collaborate in new, more productive, and more empowering ways. But that will take an army of leaders around the world who “get” the breakthrough of Entrepreneurial DNA and bring it to their local entrepreneurial eco-systems.

    I commend the BOSI Test and Entrepreneurial DNA to you. Not because it makes me a dime; after all, it’s free!

    But because I know the impact it will have on your business…and your life.

    The arrogance of the entrepreneurial “elite”

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    Every time I hear it, I want to wring their little necks!

    I’m talking about the arrogant and childish statement made by many of the entrepreneurial “elites” that goes a little something like this…

    “Not all business owners are really entrepreneurs…blah…blah..blah”. (They go on to pontificate why – but I mentally check out on their rants).

    What?

    Are you kidding me?

    Is “entrepreneur” now a title that must be earned? Have we so missed the corporate rat race that we must now introduce a cast system within our world?

    I recognize what the entrepreneurial elite are trying to do. They are trying to appear different, special and well, better than the typical business owner. In their own self-indulgent, low-self-esteem-having world, they can’t possibly imagine being in the same group as a pizza shop owner, dry cleaner, financial advisor or boutique manufacturer.

    The uber-elites want to have their own designation. A place to “arrive” when you become as great as them. I get that, and in some ways, understand why they need to feel different (see note above about self indulgence). But if you are one of the entrepreneurial elite, here’s my challenge to you.

    Leave the word “entrepreneur” alone. Find yourselves another word like “mucky muck” or “elitist” and play with that.

    The fact is, the dictionary definition of entrepreneur is a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.

    Read the definition carefully and you’ll see room for tons of different “types” of entrepreneurship. Yes, someone who organizes and manages a business is certainly an entrepreneur (and you don’t have to get VC funding to qualify for that name). However, entrepreneurship doesn’t stop there.

    There is an entrepreneur inside everyone of us. Some of us use it to climb the corporate ladder, others of us use it in the creative arts. Some use it to homeschool their kids and others step out and launch a business.

    So if you’re one of those uber-elites (who interestingly enough are typically academics with no real-life business experience, VCs who have the same DNA as a multi-level-marketer and entrepreneurs who had an exit so big, they can’t believe it themselves), back off the word “entrepreneur” and stop trying to make it a private club.

    It simply isn’t. Entrepreneurship is a God-given gift we all get to use in different ways.

    CrowdPitch Chicago sponsored by Lendio

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    Scoring financing is one of the hottest topics in entrepreneurship and my new friends @lendio are doing their part to help entrepreneurs find the right funding sources. In addition to their subscription service that boasts 70+% funding rates, they sponsor cool events like this one.

    They invited me be on a panel for an innovative event called CrowdPitch. The Chicago version of the event was hosted in partnership with the Northwestern/Kellogg Entrepreneurship Week festivities.

    CrowdPitch is a 90 min. event where 5-6 companies are selected to present their ideas to an audience of their peers and a panel of experts. Presenters have just 4 minutes to wow the audience before a brief Q&A from the crowd. Panel feedback follows.

    At the conclusion of the pitches, the audience and panel “invest” FUN money with the company that impressed them most. The winner receives a small prize, but more importantly validation, expert feedback, and exposure for their business.

    Bill Pescatello and Brian Axelrad were on the panel with me and needless to say, it was a blast.

    The five companies that pitched at the event were:

    AlumSocial: Cool concept, but their live demo crashed, so they didn’t really get to do their thing :-( . The lesson for all of us – use screen shots rather than a live demo (unless the investor specifically asks for a live demo).

    Energy Recovery Technologies: Another fantastic energy/green technology. Super competitive marketplace. I told them they needed a rockstar business development team to match the expertise of their R&D team to have a shot at being a market leader.

    Socioclean: I was super-impressed with this venture. Sharp CEO, great technology and decent traction already. If you’ve ever worried about an employer (or future employer) finding your not-so-flattering party pictures and obnoxious Facebook posts when they do some checking on you, sign up for Socioclean and they’ll help you fix that pronto! I’m confident they’ll get venture funding soon.

    SpotHero: Wouldn’t it be cool to show up to a crowded concert or sporting event to have a reserved parking spot waiting for you? SpotHero is designed to connect parking spot owners (including people who want to rent out their driveway) with spot buyers (people like you and me who don’t want to walk 5 miles from a remote parking lot). They have a stiff uphill climb ahead of them unless they can land a million bucks to leapfrog the competition. It is another crowded marketplace. However, the two founders are sharp, driven, go-getters so I’ve got my fingers crossed that they’ll stay committed to the project no matter what.

    Tix4Cause: Kevin Nemetz at Tix4Cause was super nervous making his pitch, but they have built a very cool company that is really adding tremendous value to both buyer and seller of event tickets. The next time you have some tickets to offload (or if you’re looking for great tickets to an event), check Tix4Cause first. You’ll get great seats and help a great charity in the process. A very fundable business if they can solve a couple of adoption issues on the non-profit company side (they’re working on it as we speak).

    Got a great business idea you’re working on? Find a crowdpitch event near you and get on the roster. The insight, candid feedback and “free consulting” is invaluable!

    Can’t wait to do it again :-)
    (And yes, I am a sucker for an entrepreneur with an idea, so find me in the BOSI Network and I’ll be glad to give you my two cents of input if applicable).

    Skinny Girl Bethenny – Another great entrepreneurial story

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    I have to admit, my wife and I enjoy watching her reality show.

    We watched the season 2 finale last night and I couldn’t help but cheer for Bethenny the entrepreneur.

    The way the story plays out, she’s had a colorful and challenging past. Some of it was well outside her control (lunatic parents etc) and much was within her control (personal choices).

    But along the way, she didn’t lose her fight. She (just like any entrepreneur) had an a-ha moment one day. The light bulb went off when she saw an unmet need in the marketplace. In her case, it was the idea for low calorie margaritas targeting women.

    Then came the game-changing step. She actually took action on the “idea”.

    She did her homework, took tons of risks, did the entrepreneurial thing and launched her product.

    A couple of years of great publicity later (appearing on Martha Stewart, Real Housewives and eventually her own show), her product is everywhere. It didn’t take long for the big guys in her industry to gobble her brand up for an alleged 120 million bucks.

    I did some poking around and wasn’t surprised to find the blogosphere claims she “got lucky”. Any entrepreneur worth their salt would totally disagree with those idiot bloggers (regardless of whether you agree with her product line or not).

    While others sit around and wait for a handout (or worse yet, never pull the trigger on their great business idea), she stepped out, took a risk and reaped the reward. None of it was “by accident” or “luck”.

    It was old-fashioned entrepreneurial gumption. And for that, I applaud her!

    VCs and MLMers share the same DNA?

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    “You’re crazy Joe, VC’s and MLMers have nothing in common.” Someone said to me. “After all, VCs fund highly scalable companies and take them public. MLMers sell potions and lotions door to door. How can they have anything in common?”

    Hmmm.

    Well, let’s dive a bit deeper than the stereotypes we all have been fed. Let’s look at the general behavioral tendencies of the two groups and see if we can pick up a nugget or two along the way. Keeping mind that there are always exceptions, here is just a short list of commonalities.

    – A majority of the members of each group are impulsive decision makers. When they see something they like (typically a new money-making opportunity), they jump in…fast! Oh sure, VCs hire MBA grads to do tons of due diligence and vetting on applications up front. However, if you’ve been on the inside of the process, you’ll agree that from the time the founders of a venture pitch the actual VC investors to the time a decision is made to invest, it is typically minutes and hours – not weeks or months.

    – Both VCs and MLMers tend to have a herd mentality toward money-making opportunities. When venture X gets “big VC player #1″ to invest, half a dozen others rush in to co-invest. When MLMer #1 finds the next “big play”, hundreds more follow. HINT: Fear of loss is driving both decision processes.

    – Neither VCs nor MLMers want to start something from scratch. They’d rather find a venture that has traction and a huge upside potential. Then they jump in with the intent to ride the wave all the way to the top (without getting their hands too dirty in the process). VCs call it “exit”. MLMers call it “retire with $25k a month in residual income”.

    – Both approach failed ventures as “water off a duck’s back” – part of the game they play. VCs expect a majority (sometimes 90%) of their investments to fail or significantly underperform. MLMers who have been in the industry for more than 5 years can typically tell the story of one or more busts on their way to success.

    So…

    Whadaya think?

    They aren’t so different after all huh?

    Here’s the thing. We’re all people. Some of us have some behavioral tendencies we share with each other. Some of us use those tendencies to run big banks and hedge funds and then become VCs. Others start with a couple hundred bucks in our pocket and buy a distributor kit. But from a modus-operandi perspective, the tendencies are very similar.

    So if you happen to be an MLMer or VC (or interact with them a lot), why not understand and study the amazing strengths that drive Opportunist DNA? At the same time, why not study the predisposed weaknesses and put systems in place to compensate for them? (HINT: VCs know their innate weakness to make impulsive decisions. That’s why they hire the MBA grads to slow the process down for them. There’s a little nugget from me to you if you have Opportunist DNA).

    Entrepreneurial DNA is a BIG, BIG deal. It is the engine that drives the decisions we all make within the entrepreneurial eco-system. So make sure you know your DNA and have optimized your business (and life) around it.

    You’ll be glad you did!

    The Impact of Entrepreneurial DNA

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    What’s the big deal about Entrepreneurial DNA (or BOSI)?

    That’s a question I have been asked a few times already (and I’m sure I’ll be asked that question a thousand times again).

    Everything! Is my initial answer. But I know I need to qualify that claim.

    In the book, I describe some real-life scenarios in which Entrepreneurial DNA plays a game-changing role in the outcome.

    Business selection is one of those areas.

    So many first-time (and repeat-entrepreneurs) jump into a venture for what appears to be all the right reasons.

    1. The timing is just right.
    2. There is strong market demand.
    3. There is a niche that is left untapped.
    4. There is a need that has not yet been filled.
    5. There is expertise at the founder level to deliver to a need.

    The list goes on and on…

    In the classrooms of “old-school-entrepreneurship”, these are many of the key reasons given to start a business. But is that really the reason to pull the trigger?

    Our research is showing that an entrepreneur’s “DNA” (their modus operandi, gifting, tendencies and predisposition) should be a much bigger driver in business selection than any of the items above. After all, there are thousands of “Groupon-like” companies out there – but only one Groupon. If it was just about the list above, “luck” would be the only reason Groupon won the race.

    Within just the technology space are tens of thousands of very talented developers who identify the same market niche or unmet need. Yet only a handful build a successful and scalable enterprise around it. Have you asked yourself why that is – and if there was a way to predict who had the better opportunity for success?

    The fact is, the entrepreneur/founder’s modus operandi, gifting, tendencies and predispositions (their Entrepreneurial DNA) drive whether or not they will build a small, medium or very large enterprise.

    Certain entrepreneurs are pre-wired to build certain types of businesses.

    Some are built to start up and build highly scalable entities. Others are built to create copy-cat ventures. Some are best suited to leverage existing brands like Subway, Northwestern Mutual, State Farm and Amway. Others are pre-wired to invent breakthrough products and technologies that change the world.

    A ton of money, stress and headaches can be saved if entrepreneurs just understand who they really are and select businesses they are best suited to operate. Just because a guy named Andrew started Groupon and a gal named Doris started Pampered Chef doesn’t necessarily mean you will do the same. It might, but it might not. So why not find out before taking the plunge?

    When an entrepreneur selects the type of business best suited for them, they have a more fulfilling and rewarding journey…period. When they simply let timing and market need control the selection process, they often find themselves struggling and frustrated.

    The entrepreneurial journey begins at the point of business selection – and Entrepreneurial DNA plays a critical role in that decision. In upcoming pieces, I will share other areas impacted by one’s Entrepreneurial DNA. Trust me when I say, it is a long list!

    Raising Money – UGH!

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    It should come as no surprise to you that the #1 issue entrepreneurs struggle with is raising money.

    How much should I raise?
    How should I value my company?
    Who should I go to for funding?
    When should I raise money?
    How should I pitch my company?

    The list goes on and on.

    The good news is, there is no shortage of information and insight online, at seminars and in books.

    The not-so-good news is that it can all be very confusing and overwhelming to get through.

    Having gone through the capital raising process close to 20 times with varying success, here is what I have found. There are 3 pillars that must be in place for the best possible outcome.

    1. Timing:     30 seconds after the “idea” comes to you is not the time to write a business plan and look for funding. The sweet spot for Series A funding is when you have proof of concept (site live, product prototype, service developed) and market traction (measurable customer demand, initial orders, explosive traffic with good conversion).

    2. Pedigree: I have seen some of the best companies/products go unfunded because the founder(s) didn’t understand how mission critical the pedigree of the founding management team was. Financiers don’t just buy into great ideas, they buy into great entrepreneurs. I can assure you that a management team with a proven track record of having started up, built and sold ventures is exponentially more likely to get funded than one that is a first time market entry.

    If you take a candid look at your pedigree (your education, your startup track record, your business reputation) and find yourself (and/or your management team) lacking, don’t waste a lot of time and money trying to raise money with Angel and VC investors. Stick with friends and family, get your venture to the next level of success and then pursue the more sophisticated investors.

    3. Audience: Every entrepreneur lays awake at night dreaming of that big VC investor who carves a seven or eight figure check to fund their company. But reality says, that is not the rule – that is the exception. Most businesses are not good candidates for Angel or VC funding (and neither are most entrepreneurs). Take the time to really understand your venture and who its target funding source really is.

    Who is the person and situation for which your company is the ideal investment?

    A small fraction of all startups are ideal investments for sophisticated Angels and VCs.
    About 30% of startups qualify to be financed by banks and other lenders (secured by the tangible assets of the founder and business).
    A significant majority of startups are qualified to be funded by the company founders, their friends and family.

    That is just how it is.

    If you have the right entrepreneurial DNA, pedigree and business timing, you are virtually a shoe-in for a big funding round with the big boys.

    However, if you find that one or two of the pillars mentioned above are missing or weak, don’t fret – and certainly don’t waste time beating your head against a door that will not open.

    Regroup, refocus, prove your business for another few quarters – and maybe, just maybe you’ll have all the pieces of the puzzle in place for that bigger capital infusion.

    Stay focused, committed and driven to make your company work with or without the big funding. Craft a plan that allows you to go to market without a million bucks in the bank. If you can’t, you don’t really have a business. You just have a great idea.

    Prove to yourself and your potential investor that your company is not just a great idea, but a great company run by outstanding managers and a fanatical customer base. Accomplish that, and you’ll see the 18-wheelers backing up in your driveway full of cash from investors.

    Hope this helps!

    Patience donkey…Patience

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    Growing up, my sisters used to have a saying (that came from a silly kids story about – you guessed it – a donkey).

    The saying went “Patience donkey…Patience”. I find myself saying that to myself as an entrepreneur quite often. I’m sure you do too (in your own endearing way).

    One of the toughest lessons to learn in entrepreneurship is the importance and pre-eminence of….Patience!

    We just want it now don’t we? As soon as an idea crystallizes in our mind’s eye, we expect it to come to fruition – almost as though by magic. Anyone or any circumstance (including time) that gets in the way are seen as a mortal enemy. A rude barrier to our bliss.

    We are just so darn impatient! (Don’t leave me alone on this one).

    But when I study my highly successful entrepreneur friends like Matt Moog, former CEO of CoolSavings and founder/CEO of Viewpoints, I see the reality of a very patient entrepreneur playing itself out. Last week Matt spoke at a TiE midwest event and talked about the important lessons he had learned along the way – one of them being the importance of patience. He attributed a great deal of his breakthrough success as a CEO to being patient – even when lucrative opportunity to be impulsive presented itself.

    So when you find yourself thinking…

    – We’ve gotta get that new functionality on our site live NOW!
    – We’ve gotta get in front of those big investors NOW – or else!
    – I’ve got to hear back from that potential client NOW!
    – Why aren’t my staff members moving as FAST as I need them to?
    – When will our user adoption get to critical mass? Let’s do something to accelerate it!
    – I really think we should take over that new office space NOW!
    – If we don’t spend the money on X NOW, the sky will fall.

    Listen, driving for results is good – and important.

    Being impatient, however, can be quite dangerous. And there is a big difference between the two.

    I’ve got plenty of horror stories (personal and bystander) of situations where an impatient entrepreneur made a rash decision that cost them relationships, money and/or market opportunity.

    So the next time you find yourself fretting to GO, GO, GO on a circumstance or big decision, do what my friend Matt does. Put it away for 2 weeks and if it is still just as big of deal then as it originally was, take action. (Side note – Matt has a two month “put-it-in-the-drawer” policy on any new ideas).

    In other words…

    Patience donkey…Patience
    (gulp!) – that’s me taking a taste of my own medicine.