Archives for September 2018

September
12, 2018

7 min read

This article is excerpted from Entrepreneur magazine editor in chief Jason Feifer’s monthly newsletter, The Feifer Five. Each month, he sends out five insights to help you think more entrepreneurially. Subscribe here.

And just as I ponder the meaning of this newsletter, I have some sizable insights for you to ponder as well — about how we as entrepreneurs define ourselves, how we can think big while still zeroing in on the little stuff, and more. The table of contents:

1. How do you define yourself? (Malcolm Gladwell has an answer.)

2. Are you sweating the small stuff? (Just Salad is!)

3. What do you do with rejection? (I hung it on my wall.)

4. How do you react to others’ success? (This reader did it… poorly.)

5. Are you easy to reach? (You should be.)

Let’s get some answers. Here we go!

1. How do you define yourself? (Malcolm Gladwell has an answer.)

Image credit: Bryan Bedder | Getty Images

When you hear the name Malcolm Gladwell, you think of something: a particular kind of writer, or podcaster, or whatever. But Malcolm Gladwell doesn’t. I spoke to him recently, and was inspired by the way he thinks of himself. He aggressively does not define himself. “I think it gets really dangerous — if you’re someone who’s doing something creative — to start to define what you do,” he tells me. “Even if it’s a correct definition, it’s limiting to have that thing in your head. It starts to constrain you.”

Then he expands on that idea a little more:

“I’m open to suggestion. The most important thing is never to make a decision about yourself that limits your options. Self-conceptions are powerfully limiting. In the act of defining yourself, you start to close off opportunities for change, and that strikes me as being a very foolish thing to do if you’re not 85 years old.”

Self-conceptions are powerfully limiting. I’ll be repeating that the rest of my career.

2. Are you sweating the small stuff? (Just Salad is!)

I noticed an interesting change recently at Just Salad, a chain that I often buy lunch from. I asked the CEO to explain it, and his answer is a nice insight into the relentless tinkering that’s requires to run a strong company.

Some quick background: Just Salad offers reusable bowls, which are both eco-friendly and encourage customers to come back more often. (If you opt for a reusable bowl, instead of a disposable one, you get some free salad toppings.) Here’s my bowl, which I got maybe a year ago.

If you squint and look really close, you’ll see Just Salad’s logo. It’s imprinted onto the bowl, almost imperceptibly. But recently, I noticed a design change:

A big, visible Just Salad logo is on each bowl now! I emailed Nick Kenner, the founder and CEO, to ask what’s behind the change. I figured it was more complex than just a little bowl design upgrade. And I was right. Here’s what he wrote back:

“The new reusable bowls that you described hit the stores about a month ago. About six months ago we did a strategic review on how we can make the reusable bowl more prominent in our locations. This involved:

• Better location of where bowls are kept

• More prominent signage in-store

• Better signage on bowl, as you indicated

• Recognition from media and nonprofits on our reusable program

• The EPA actually recognized us in June at a ceremony at their offices as the largest restaurant reusable program in the world!

“All this, as well as general political environment (as the White House turns back on protecting the Earth, others seem to want to try harder to protect it right now), has led to peak bowl sales.”

How great is that? The companies that grow and thrive are the ones that constantly reexamine the details. Make it a prompt for yourself: What little thing have you left alone for too long?

3. What do you do with rejection? (I hung it on my wall.)

Want to see one of my favorite rejections? It’s this:

Recently, people on Twitter were sharing rejections they’d gotten, and it made me think of this old one. It came from an editor at an old job, who wrote these words on a story of mine. He clearly wanted me to feel embarrassed, but know what I did instead?

I hung it on my wall like a trophy. As if to say, I don’t take this guy’s crap seriously. I’m better than he thinks I am.

Rejections are only as powerful as you let them be. We’ve all been rejected. When you are, don’t bury it. Hold it high. Let it fuel you. Let’s keep going.

4. How do you react to others’ success? (This reader did it … poorly.)

We put a sharp, ambitious 13-year-old on the cover of September’s Entrepreneur magazine, and have received an overwhelming number of positive messages about it. But I also got one angry email. I want you to read it, and witness the ugliness of resentment.

Here’s what a man named Mel emailed me: “It’s so heartening to realize that if a ditzy-looking kid can become a millionaire so easily, I must have completely screwed up my life, and despite all of my hard work and efforts, I’ll never be an outlier like that. I’ve tossed the magazine, canceled my subscription, and am now facing reality. Thanks so much.”

Good, Mel. Cancel the subscription. Go do something else with your life, because clearly entrepreneurship is not for you. Entrepreneurship is competitive, of course: We compete against ourselves, our peers and the industry at large. We’re out to prove our doubters wrong. We want to win. But we never win by playing the victim.

I get it — this isn’t always easy. Someone will always be doing better than us. But we cannot not allow ourselves to be consumed by resentment. We cannot sit around saying, “It shoulda been me, not her” — because that, Mel, just means we’re sitting around not helping ourselves. Focus on you, Mel. Celebrate the successes around you, or at least learn from them. Resentfulness will get you nowhere … and nowhere is where I suspect Mel is.

5. Are you easy to reach? (You should be.)

Earlier this month, I was trying to contact a writer I might want to work with and couldn’t find their address. It’s not in their social media. It’s not on their website. It’s nowhere. And this happens more often than it should — not just with writers, but with entrepreneurs, with executives, with lots of people of interest. What are you protecting against? The arrival of a few unwanted emails, at the expense of potential work and partners? Take it from me, a guy whose email address is easy to find and who receives a lot of email: It’s not hard to hit delete on the junk. And it’s awesome to receive the good stuff.

Just recently, I assigned a story to a writer who wasn’t my first choice. Know who was? Someone I spent five minutes trying to find an email address for, and then gave up. Maybe they didn’t want the work! The person I finally did reach was sure happy for the work. (And they did a great job … so it worked out for all.)

Seriously: Go google yourself right now. Does a site with your email address show up high in the rankings? No? Fix that!

That’s it for this month’s The Feifer Five. Enjoy this newsletter? Don’t forget to subscribe!

September
11, 2018

7 min read

Opinions expressed by Entrepreneur contributors are their own.

When we launched Cielo MedSolutions, a SaaS provider of population management healthcare apps, in 2006, my co-founder and I assumed we’d be able to raise venture capital. After all, we both had track records of having built and run software businesses and making money for investors. However, we failed to raise VC funds, and had to settle for a far more modest amount of capital from a combination of angels, economic development agencies, non-profits and federal grants. Partly as a consequence, we grew considerably more slowly than we had hoped. We ended up with a nice exit — sold to The Advisory Board Co. (ABCO) a little over four years later — so nobody’s feeling sorry for us. But, it wasn’t the big splash we set out to create.

Related: You Can’t Get VC Funding for Your Startup. Now, What?

Why? Even I, as a student of the game, have had trouble gauging startup investor interest.

This experience — combined with observing hundreds of other startups — motivated me to look more closely at these tough questions: As you’re thinking of launching a business, or looking to take your existing business to the next level, should you aspire to raise outside financing? And if so, what types of funding sources might consider your business to be an attractive investment? VCs? Angels? Friends and family? None of the above?

The Startup Fundability Matrix

In my recent book, The Launch Lens: 20 Questions Every Entrepreneur Should Ask, I introduced the Startup Fundability Matrix (see below), a conceptual framework that can provide you with preliminary answers to these questions.

Related: Is the VC Era Over? Let’s Hope So for the Sake of Business.

A quick, nerdy explanation

The x, or horizontal, axis of the Startup Fundability Matrix indicates capital efficiency (ranging from low to high). All other things being equal, outside investors prefer to put their money behind a business that’s capital efficient, meaning that for every dollar invested, it’s good at producing strong returns on a dollar-for-dollar basis. On this scale, the more “investable” businesses tend to be those that (a) require only a modest amount of capital to launch, and/or (b) can be scaled dramatically and efficiently by injecting just a modest amount of additional capital.

The y, or vertical, axis denotes valuation multiples (again, ranging from low to high). Valuation is the value of the company, or its overall financial worth to investors. Since early stage companies are privately held, and therefore don’t have a stock price you can look up on a public exchange, investors often use patterns from comparable companies to estimate the valuation of a startup. The most commonly used metric is the valuation multiple — that is, how much certain types of companies are typically worth, measured as a multiple of the last 12 months’ earnings (profit) or revenue (total sales). In general, businesses that achieve high valuation multiples are those that show three characteristics: high growth potential, sustainably high profitability and strong differentiation versus competitors.

So, now we’re ready to look at where various businesses fall in the Startup Fundability Matrix. Here are the four quadrants:

Quadrant 1 (upper right): Venture Capital — Businesses have a combination of high valuation multiples and high capital efficiency — inexpensive to launch and/or inexpensive to scale; these startups are the most attractive to VCs, corporate strategic investors and organized angel groups (which often behave like VCs).

Quadrant 2 (upper left): Patient Capital — These companies share the high valuation multiples with Quadrant 1 firms, but are less capital efficient, often because they lend themselves to less rapid scaling due to addressing a more modest market. These businesses tend to be better suited to investors who are more patient and perhaps less oriented toward pure financial returns — such as friends and family, specific angels with a special affinity for your particular sector, federal government grants, or state and local small-business loan programs.

Quadrant 3 (lower right): Bootstrap — These businesses rank relatively poorly on the scale of valuation multiples; on the other hand, they tend to be capital efficient (inexpensive to launch and scale). Think of Quadrant 3 firms as cash-flow or lifestyle businesses. It’s often possible to get such a business up and running with a modest investment out of savings or a bit of credit card debt.

Quadrant 4 (lower left): Dead Zone — Businesses here are extraordinarily hard for entrepreneurs to finance, and for good reason — they require a lot of capital to launch, and once up-and-running, are simply not that valuable. As a consequence, outside investors tend to run away from such startup ideas.

Related: 5 Ways to Bootstrap Your Vision Into Reality Without Outside Funding

How I could have used this tool

Circling back to Cielo MedSolutions, we launched the company assuming we were in Quadrant 1, an “investible deal” for VCs. We were wrong, because most healthcare IT-oriented VCs, while feeling comfortable with the high valuation multiples in our sector, suspected that we were too niche-y — addressing too modest a market — to be dramatically scalable post-launch. Although we didn’t have the benefit of the Startup Fundability Matrix at the time — and hindsight is 20:20 — what the VCs were effectively signaling to us is that we belonged in Quadrant 2.

We raised a couple of million dollars from a blend of “patient capital” investors. Had we known our “quadrant” up front, we could have saved a lot of time pitching VCs, and redirected our efforts toward selling to customers, building industry alliances and the like. Alternatively, this clarity of thought might have motivated us to explore broadening our product offering.

Related: 5 Common Mistakes That Keep Venture Capitalists From Investing

How you can use this tool

Applying the Startup Fundability Matrix to your startup can help you be clear-eyed about whether you should aspire to raise outside capital, and if so from what types of investors.

If you think you’re high on the y-axis (i.e., high valuation multiples), then the primary determinant of whether you’re in Quadrant 2 (Patient Capital) or 1 (VC) is market size. Narrow or niche product businesses push a company to the left (Quadrant 2), while very large addressable markets and broader product platforms tend to push a company to the right (Quadrant 1).

On the other hand, if your business ranks low on the y-axis (low multiples), the principle factor pushing you left or right on the x-axis is launch cost. Companies that can be launched with a modest amount of capital fall into Quadrant 3 (Bootstrap), while those that require large amounts of capital to build (e.g., to fund construction of a factory or a large store, and to purchase large amounts of inventory) fall into Quadrant 4 (Dead Zone).

At the earliest stages of company development, the Startup Fundability Matrix can even help you think through the pros and cons of different business models.

If, for instance, you’re an entrepreneur with a passion for buying and selling used musical instruments, a Quadrant 3 approach might be to open a brick-and-mortar store, with all its associated overhead and geographic constraints. Tough to get financed, so you’ll probably need to bootstrap it.

Alternatively, you could pursue a Quadrant 2 (or even possibly 1) business model and create a re-commerce marketplace where your website enables sellers/consigners of instruments to find interested buyers. By making that business model shift, you’re tying up less capital in a physical store and inventory, while broadening your geographic reach, profitability and scalability.

In this example, the latter business model may not only be more fundable, but stands a much better chance of being sustainably profitable, and eventually earning money for you while you sleep.

September
9, 2018

3 min read

One of the best practices for having a pristine digital presence starts with your profile picture. That’s especially true when it comes to professional networking site LinkedIn.

Related: The Do’s and Don’ts for Taking the Perfect LinkedIn Profile Picture

Whether you’re looking for a new job or pitching potential clients, LinkedIn is an amazing resource for professionals. That is, if you use it correctly. A recent study by employment screening service JDP analyzed the profile pictures of 2,000 LinkedIn members across 11 industries to uncover various trends, and who’s doing what right and what wrong. Factoring in elements such as framing, lighting, resolution, attire and facial expression, the study ranks various industries for their overall profile pic performance.

In some industries such as real estate, human resources and marketing and PR, an A-grade LinkedIn photo is extremely common. From recruiting new hires for a company to acting as the face of a brand and driving sales, it’s no wonder these client-facing industries scored highest compared to others. On the opposite end of the spectrum, education, government and retail professionals had the lowest overall scores for their LinkedIn pictures. Thirty-six percent of healthcare professionals, 32 percent of government employees and one-quarter of health, wellness and fitness workers had no photo at all.

Related: 3 Ways You Might Be Screwing Up Your LinkedIn Profile and How to Avoid Them

So what’s typical in a LinkedIn profile picture? For starters, your best smile. Over three-quarters of people have a “full smile” in their pictures, while 12 percent have a “tight-lipped” smile and another 12 percent don’t smile at all. When it comes to attire, a majority of people lean towards a business casual look (42 percent), while others choose a social look including evening attire (26 percent), a formal look such as a gown or suit (24 percent) or casual clothes including T-shirts and workout gear (8 percent). Overall, the most formally dressed industries are finance, banking and real estate, while the casual dressers tend to work in retail and health, wellness and fitness.

Related: 8 Types of Photos You Should Never Use on Your LinkedIn Profile

In addition to smiling and sporting business casual clothes, professionally shot photos are also highly popular among LinkedIn users — 43 percent of profile pictures on LinkedIn are professionally shot. However, professional photos also vary by industry. For example, a whopping 70 percent of marketing, advertising and PR workers have professionally taken images on their pages, with finance (65 percent) and real estate pros (64 percent) following close behind. No time or resources for a professional picture? No need to worry — plenty of people post images taken by friends or families. However, one pro tip: post selfies with caution and try not to choose a group photo where you have to crop everyone else out. Often, these can be a turn-off to other professionals looking to connect.

To learn more, check out JDP’s infographic below.

September
8, 2018

2 min read

Millennials get a bad rap. From labels including “lazy,” “ungrateful” and “entitled,” these 20- and 30-somethings can’t catch a break.

“Millennial bashing” has basically become a national pastime. Maybe that’s because millennials are more active, vocal and visible online, as the first generation to fully utilize social media in their everyday lives. Or instead, maybe it’s because people underestimate the real challenges millennials face. Just take a look at student debt today.

Related: Millennials Want Transparency and Social Impact. What Are You Doing to Build a Millennial-Friendly Brand?

In the past 15 years, student debt has tripled in American households, from a collective $340 billion in 2001 to $1.3 trillion in 2016. While some might argue that millennials waste too much money on overeducation, the truth is, a large portion of today’s jobs require higher degrees of education. In 2017, the unemployment rate for people with bachelor’s degree was 2.5 percent, while the unemployment rate for people with only a high school diploma was 4.6 percent.

Related: 8 Ways Any Millennial Can Be a Millionaire in 5 Years

Unlike baby boomers, it’s not all about the money for millennials. Jobs are about passion, innovation and making a change. That’s the reason why many gen Yers find themselves hopping around different jobs. In fact, 43 percent of millennials expect to leave their current jobs in the next two years because they don’t feel their company cares about innovation and societal change. But millennials aren’t the only ones doing the job hopping. Gen Xers bounce around almost as much: In 2000, when gen Xers were in the same age range as millennials are today, 60 percent had been at their job for 13 months or more. In 2016, 63 percent of millennials had been at their job for more than 13 months. So, the numbers themselves aren’t so different.

Related: Combating the Millennial Attention Span to Keep Your Team Engaged

It’s time to cut millennials some slack. To learn more, check out BachelorsDegreeCenter.org’s infographic below.

September
5, 2018

3 min read

Lamborghini has one. So does Porsche, Aston Martin and Maserati. Even Ferrari has confirmed they’ll be unveiling an SUV by 2020 the latest.

It’s an easy-to-understand business decision, as sport utility vehicles continue to surge in popularity over small and midsize sedans in the US. As Jeff Schuster, senior vice president of forecasting at LMC Automotive, told CNBC, “We have SUVs eventually crossing the 50 percent threshold by themselves in the near future.”

Lamborghini Urus

Image credit: Lamborghini

There is one holdout, however. Mike Flewitt, CEO of British supercar manufacturer McLaren, recently told Top Gear that they will not be joining the pack and building an SUV.

There’s more than enough SUVs in the world, and we don’t need another one. That’s sort of the flippant side. 

Effectively when we look at products — and we’re always looking at product concepts — is that there are three measures. One is around the brand, one is around the technology and the other is around the financials.

So, the brand: an SUV is only going to dilute the McLaren brand. Our brand and heritage is motorsport and great drivers’ cars. SUVs are great, they have their place, but they’re not great drivers’ cars. They utterly dilute the driving experience so it makes no sense.

Considering McLaren started as a championship racing team that decided to break into the supercar game in 1992 with their now-iconic F1, that makes sense. But there’s more to it.

Related: 8 Best Dream Cars of 2018 for Entrepreneurs

McLaren P1

Image credit: McLaren Automotive

As an independent company, McLaren doesn’t share the resources enjoyed by brands like Lamborghini, Porsche and Bentley, all of which are all part of Volkswagen Auto Group. These companies can swap technology and spread development costs of new models amongst each other. “Nothing wrong with them,” Flewitt told Top Gear, “but we don’t have a technology set that suits an SUV, so we’d be starting from scratch.”

Related: Why It Pays to Break the Rules at Work

He also doesn’t believe that McLaren faithful would even be interested in an SUV. “The customers love what we do,” Flewitt claims.

That may be true, who wouldn’t want to see what an SUV with scissor doors looks like?

Image credit: McLaren Automotive