Last night, I participated in Start-Up Pitch Night, and it was… kind of nerve wracking, but never the less a good gauge of one’s ability to pitch their startup in 60 seconds (there was a timer, and people did get cut off).
How did I do?
Since the event was organized into a competition, I convinced my friend Dave Pinchom to come along and cheer me on.
After it was all over, I asked Dave if he thought I won.
No, you didn’t win, he said, without having to think too hard.
Though I may not have won, I was enthusiastic to hear the nights guest speaker — Mike Levinson — (here is his bio…)
“Mike Levinson is a Founding Partner at DreamIt Ventures; co-founder and CEO of WizeHive, a SaaS productivity tool; and an active angel investor with a portfolio of over a dozen technology companies.
Before DreamIt, Mike co-founded PTS Learning Systems, a company focused on corporate technology education and electronic performance support tools. Under his leadership, the company grew into a highly profitable international organization with over 200 employees and revenues of $30 million until he sold it 1999.
Mike also co-founded, and later sold, TechWise Group, Inc., an information technology-outsourcing firm for small and medium businesses, and was a co-founder of a legal management package called LegalEdge Software.
He also helped launch the Aim Academy, a school for bright children who learn differently, where he currently serves on the board.
A graduate from the Wharton School of the University of Pennsylvania, Mike holds a degree in Economics and Accounting, obtained his CPA certificate in Pennsylvania, and graduated with a JD from Villanova Law School.” (From his Dreamit Ventures page)
Mike is exactly the kind of no-nonsense straight shooter an entrepreneur will encounter in the VC World, so hearing his 30 tips for start-ups proved invaluable to me as I continue to develop 2 Hour Jobs, my own startup.
Instead of re-creating Mike’s entire power-point, I picked out the ten (or so) that i thought might resonate most with young bootstrappers and take over the world types, and paraphrase generously.
So here goes:
1. Understand Your Endgame…
Whether beginning a new project or founding a company, begin with the end in mind. Ask yourself, what is it I want to do? Do I want to get rich? Do I want to change the world in a specific way? Understanding one’s endgame will help them to know if they are going in the right direction or are in the right business
2. Be Realistic About Your Funding And Marketing Needs…
Because entrerpreneurs tend to be optimistic dreamer types, it is important for us to understand how much money and how many staff we actually need, versus our idealistic perspective of those needs
3. Cherish Your Equity, Or You Only Get One Pie…
Words of wisdom from Mike’s dad, “you only get one pie, be careful how you divvy it up”
When founding the company, avoid being too generous with equity in the company early on. Offer employees / founders a vesting schedule, so that they build equity over time. Too often early partners in a company drop-out when the going gets rough, taking with them a large portion of equity, leaving the remaining founders to carry the load without incentives to offer others
4. Give Your Staff The Credit…
One of the most important things for me, the natural braggert, to hear from a successful entrepreneur was when Mike said, “I try never to take credit for anything…” His point was that a good leader empowers those around them by crediting them over himself for the company’s successes.
5. Don’t Hire Easy, Hire Right…
When you are starting a company, it is often easy to bring in the people you know or who you are comfortable with, or flat-out whoever is available. Mike’s advice, in keeping with a focus on the endgame, is to think long term when selecting your team. Make sure to do your do diligence with the people you hire, ensuring they are a good fit, and not because you like someone.
6. Lead By Example…
In short, companies need a leader, and if that person is you the founder, your staff will look to you to set the pace. Be the role model for the work ethic and level of commitment you expect from those you work with.
7. Relentlessly Keep Overhead Low!!! (exclamations are mine, because this is a mistake I always seem to make)
Mike is a big believer in frugality, stating that he would rather use the money to hire the right employees, than spend money on fancy office space and high-end furniture. Incidentally, he mentioned that frugality is another way he leads by example. Mikes rule of thumb is to ask ‘is this purchase a need or a want?’
8. Make Good Not Perfect Decisions, But Execute Well…
Another way I have heard this said is, don’t let the perfect be the enemy of the good, or don’t let your ideals paralyze your progress. Don’t spend so much time agonizing over the perfect decision that you lose your forward momentum. Instead, make the best decision you can, and then execute that decision well.
9. Determination Is Most Important Factor In Spotting A Successful Entrepreneur
Yup, contrary to his former belief that intelligence was king in selecting entrepreneurs to invest in as a venture capitalist, it turns out, personal determination as a character trait wins the day time and time again in Mike’s experience. Signs of determination include, how resilient is an individual when confronting obstacles, and how does one respond to failure? Do they quit, or pivot and keep moving forward? The determined pivot, or bob and weave but stay in the fight.
10. Start Narrow In Focus, Expand Later
When starting a company it is a costly mistake to try and be too many things to too many people, to soon. Entrepreneur’s tend to have idealistic notions of what they can acomplish with the resources at their disposal. The cheapest, best and easieast coarse for the majority of startups is to start with addressing a single need in the market, and growing slowly, gradually increasing scope as you gain traction.
(Ok, there was a tie for #10)
10.2 Traction Trumps Just About Everything Else…
More important than your business plan, or how smart you are, or even your founding partners, the thing venture capitalists, and angel investors, and just about anyone else you expect to give you money to start your business is looking for, is traction. Traction, as I understood Mike, simply means a measurable response from the market. It really doesn’t matter what your idea is, if its far out or boring or even genius; what matters is whether or not people are into what you are doing?
You have the best idea since sliced bread, and people will line up to pay you money once you get it off the ground — that’s wonderful! Now prove it. Because if you can, you might just get the attention of a venture capitalist.