Be Your Best Judge

Be Your Best Judge

This is a small extract from Michael E. Gerber’s ‘Awakening the Entrepreneur Within’. Michael Gerber is the bestselling author of The E-Myth Revisited, E-Myth Mastery.

He says “Unfortunately, most businesses don’t close soon enough. They just linger on and on and on, surviving as best they can. Entrepreneurs should never create a business simply because it can survive. To do so would be to commit oneself to daily dying. Entrepreneurs create business that thrive.”

I guess that simply says a lot.

While starting companies is one thing, but something that entrepreneurs should always constantly do is judge or evaluate their business/ progress/ future growth, rather than losing sight of the big picture in the race to capture more market share…

Judging based on the business itself, competitors, and on the vision.

Many companies just seem to drag the eventuality, that way burning tons of money, sabotaging employee careers, and neither growing nor benefiting from the business.

Opposed to that, it sure takes the rare soul to accept defeat, wrap up, and fight another day.

And there is an advantage to that. Your big business could be based on the idea you get after you’ve freed your mind of a business that’s just trudging along. So be your best judge, and take a good call.

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Models that Puzzle Me

This is one of of some business models that just don’t make sense to me.

Models that Puzzle Me

If you came here expecting some scoop on Gisele Bundchen or Miranda Kerr, I suggest you hit the ‘Back’ button. This one’s more about the ‘less figure, more strategy’ business models. I’ll work on a post on real models sometime soon though, I promise.

A few years ago, on a random day at office, I received a call about an investment opportunity. At the time, I used to take an average 2.5 inquiry calls per day, speaking to a wide assortment of people. From second and third generation businessmen to entrepreneurs working on their second or third successful venture. And even some final year students who had budding dreams about what could as well be the next big thing. And every once in a way, I’d get a venture who’s business model was confusing. Here’s one of a few business models that puzzle me.

Anyway, so this call, Mr. Promoter of a company that was into the job portal business that was based on referrals. Simply put, the usual job portals work on the model that companies that hire from a particular site would have to pay them certain fees which would give them access to a filtered set of numerous candidates, and perhaps if some of them were hired, the portal would get another x amount of money per candidate hired.

Now that model, as we know, perhaps works just about fine, as demonstrated by the popularity of naukri.com, monster.com, timesjobs.com, and several thousand others.

This particular business model Mr. Promoter told me about, seemed to be based on a reward system. How it works, is as follows. You are  a good friend of mine. I know you’re looking for a job, so I get in touch with this company, and give them your cell number or perhaps your mail id. They get in touch with you, tell you that they’ll help you with getting a job. They ask you for your resume, and for the particulars of the kind of job you’re looking for, etc.

Now suppose they find a suitable opening for you. They put you across to the company, and in case you’re hired, obviously this firm would get their fee for helping them find a suitable candidate. Of that fee they receive, I would get a small percentage for the lead. Thus incentivizing me to refer more friends of mine for more requirements.

I tried discussing with Mr. Promoter, almost to the point of arguing. I just couldn’t see the future of such a business, and I wanted to make sure he saw my perspective. It appeared simple to me. I could of course, be totally wrong. I mean, that’s what the VC business, just like anything else, is about. It’s about perspective. I could have my views, Mr. Promoter would have his. The market and success or failure of the company would prove one of us wrong.

Anyway, so my points of argument were, that the higher the post, the higher the pay the firm, and in turn the person referring someone would receive. But, in the real world, you don’t really find a VP or CEO of a company referring someone to a firm. Right? I mean, who would have the time or the inclination for something like this. And at that level, one would have bigger things to worry about that trying to find people in order to make some quick bucks by way of referral.

So that leaves us with entry-level all the way to perhaps lower or mid-management candidates. Now most of them would anyway be registered on all the top job sites, where many if not most companies, would be tapping into, as one of their many sources for finding candidates. So that being the case, we can’t really expect a group of students from a college to refer each other to this firm in the hope of supplementing their pocket-money, eh?

So, anyway, I turned down Mr. Promoter’s investment proposal and even called him later to try to reason out that somehow, the business model didn’t seem to hold. He however, seemed convinced.

So much for one of the business models that puzzled me. The promoter and I have not been in touch since. And while I do hope he’s doing well, I am curious to know how his business worked out for him.

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A Soccer for Peace

One World Futbol – Game for Peace?

A Soccer for Peace

Not so long ago, one Tim Jahnigen invented the most durable soccer ball ever. A soccer ball that does not need pumping, and one that never goes flat. It is said the ball could remain unaffected by even the worst environmental conditions. That’s almost 2 years of hard work, dedication and perseverance brought to perfection.

All this, inspired by a documentary on refugees in Darfur who were playing soccer with a ball made of trash and twine. Is’t it a brilliant idea?

You can read more about it at http://www.oneworldfutbol.com/how.html.

$39.50 gets you an all-terrain soccer ball. For every football they sell, they donate one by way of their non-profit outfit. This great initiative begs one to imagine a generation of people in a war-torn region dropping their guns to play a game of soccer instead.

That would be a step towards hope. A step towards peace.

Lets hope the ‘One World Futbol’ is a big step in that direction.!

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Dare to Venture?

Dare to Venture?

“The best things in life are free,

But you can keep ’em for the birds and bees;

Now give me money, (that’s what I want) that’s what I want.”

– Barrett Strong

Lets see. First time entrepreneur? Maybe you’ve already taken the brave leap, but suddenly hit a roadblock for lack of funds to scale up? Or not enough to even qualify for an order? Perhaps banks wont help because your services or IT firm doesn’t fit into their way of doing things? Or even better, you have a crazy idea that could as well be the next big thing, only if someone would see the potential growth and the guts…

If you sniggered after reading any of the above, you’ve probably already had your share of knocking on doors in a bid to expand your business, or even just set sail…

I’ll give you a lil overview on venture capital, hopefully answering some of those questions you had about it…

  • VCs invest in ideas, businesses with a high amount of perceivable risk but also a potential upside
  • VCs invest towards buying a stake in your company (they buy shares of your company, without any collateral or pledge. That however, doesn’t mean that you don’t take their money or them seriously coz it appears to be tension-free capital unlike a bank loan.
  • Not wanting to alarm you, but generally the legal agreements with a VC are made in such a way that the VC has a significant powers where the company is concerned.
  • The powers and rights should be seen as a trade off for the risk the VC takes, and the collateral-free funds they bring into the company, and their time and effort.
  • And while certain clauses in these legal agreements might give some of you sleepless nights, many extreme measures are almost never exercised by the VC. They’re sometimes just there so that promoters don’t think of playing any tricks on the VC or the company.

Yeah I know this is a very basic and simple way of putting it. There is much more to it, but if I were to put more here, you’d be asleep before I’d expect you to scroll down…

Anyway, I’d just like to elaborate a bit on the last point in the image above. I think is crucial for you entrepreneurs to know when you plan to raise money from professional investors:

(ok, now I usually get extreme reactions to my comparisons/ examples, so even if you find the comparison absolutely insane, don’t miss the underlying message)

The relationship between a VC and the promoter/ management team…it should be looked at like a serious relationship, a marriage of sorts. Or even as though you were looking for your next best friend if you’d like. And as we all know, everything long term can’t be based on the trivial. Like ‘I love the way she looks n dresses’, or, ‘I think she’s my soul mate coz we look great together’. Or ‘she just has the most amazing expression when she’s trying to work the microwave while reading thru the manual’. Or some similar nonsense.

The long haul asks for bigger and more important factors to be considered.

Venture funding is never about the money as it is about the connect the promoter, the team and the VC share. You could probably raise capital from multiple sources. But nothing will compare to the magic the team of promoter and VC together can create.

And unlike relatives whom we don’t get to choose, promoters can and must take time to see if her or his visions, objectives and spirit matches are clearly understood and appreciated by the VC they’re in talks with. Coz otherwise, like good ol’ Axl Rose says, ‘nothing lasts forever…’ Things sure can get nasty between promoter and VC if they don’t share a similar vision. And they are bound to lock horns. In which case, they both suffer, along with the business, employees, customers, etc.

You wouldn’t really want a tug-of-war with the promoter trying to go global next year, and the VC ranting for a quicker exit.

Even if your business is strapped for cash, always choose your VC very carefully. And raise only the money you need. Gone are the days when VCs funded the Lamborghini’s of dotcom promoters.

I’m still just four years and learning in this industry. But if you do have any queries about venture capital, fire away. I’d be more than happy to try and help you out with it.

Happy fund-raising.!

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Look forward to your views. And if you liked this one, consider following/subscribing to my blog (top right of the page). You can also connect with me on LinkedIn and on Twitter.