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What Does a CEO Really Do, Anyway?

Posted on November 4, 2011 by Inc. Staff

Each day, Inc.’s reporters scour the Web for the most important and interesting news to entrepreneurs. Here’s what we found today: Three essential CEO skills. Early on in his career as a VC, when one of Fred Wilson’s portfolio companies was having a hard time and he was on the hunt for a new CEO when he realized he didn’t have a clear or concise picture of what a CEO does. One of the company’s board members replied: “A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.” And everything else you delegate. Do you think there are other essential skills for a CEO to have? Let us know in the comments. Reviving New Orleans, one entrepreneur at a time. Five years after Hurricane Katrina flooded nearly 80 percent of the city, a new wave of entrepreneurs are hard at work helping to return the Crescent City back to its former glory. As Portfolio reports, the rate of entrepreneurs starting businesses in New Orleans is now higher than the national average, with 450 per 100,000 people starting businesses. Those new businesses have also helped to raise wages, which have grown 14 percent over the last five years, putting them on par with the national averages for the first time since the 1980′s. The article details the struggles of a handful of entrepreneurs who learned to adapt and adjust to keep their businesses going post-Katrina. As the owner of a construction firm explained, “It was a totally new environment, so we were a totally new company, even though we’re still the same name. We had to rethink everything.” Who’s not using location-aware services? Almost everybody, the New York Times reports . Just 4 percent of Americans have ever tried a location-based service, such as Foursquare, Shopkick, or Facebook Places, which let people report and broadcast their physical location to friends – or everyone – online. Just 1 percent use them weekly – and that’s mostly young men in urban pockets. Why are we so location-shy? For a lot of people interviewed, privacy can be a concern. Who has no fear? “The magic age is people born after 1981,” said Sam Altman, chief executive of Loopt. “That’s the cut-off for us where we see a big change in privacy settings and user acceptance.” Advice of an entrepreneurial father. In his latest blog post, serial entrepreneur Steve Blank shares the advice he’s given his college-aged daughters on how to survive and succeed in what is still often a male-driven business world. Some of his main points: “There are implicit rules of competition and collaboration in companies,” and “In most companies men set these rules … They don’t have to explain the rules to other men so it never occurs to them to explain the rules to women.” And if they prefer collaboration to straight-out competition, “they need to understand what their career choices are,” Blank writes. “There are plenty of other ways to be a productive member of society other than a position on a corporate org chart.” Realistic or pessimistic? Innovation is for everyone, right? Not so, contends Business Week’s Pat Lencioni . He writes that only a limited number of people in “leadership” roles should bear the burden of innovation. Everyone else should focus on being “dutiful, enthusiastic, and consistent” about their jobs. By telling all of their employees to innovate, executives also run the risk of confusing workers and even stifling company success by creating chaos. Instead, Lencioni advocates a practice dubbed “creatonomy.” A company with “creatonomy” has employees who do their jobs and satisfy customers in the most effective way possible, and don’t necessarily contribute to how to run the business. The end result cultivates brand loyalty, employee charisma, and customer appreciation. The name game. Sometimes, naming a business can come with hidden pitfalls – especially if done hastily. It might seem appealing to go with your first hunch, or first great website name, but experts say several major considerations should go into the moniker-making process. First, you’ll want to be unique: a similarly named business could always slap you with a trademark-infringement lawsuit. Kori Stanton estimates she lost $11,000 in wasted marketing materials and incorporation fees after being sued and changing her cookie-company name. And what if your name is confusing to customers? The Wall Street Journal explores an array of potential pitfalls . Want to avoid them? Check out our guide on how to choose the best name for your business. More from Inc. magazine: Get this delivered to your inbox. Follow us on Twitter. Follow us on Tumblr. Like us on Facebook. Hurricane Katrina – New Orleans – Business – Wall Street Journal – Fred Wilson Continue reading →

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This Start-Up is "Auntie" Establishment

Posted on September 29, 2011 by Nitasha Tiku

When the entire market focuses on one niche, and you choose another, you’re either a bold innovator, or a failure. Henry Ford’s quote about building cars for people wanting “faster horses” comes to mind. Last week I stopped by the BlogHer conference in New York, a highly popular national event which was full of energy, women bloggers and large consumer brands trying to reach those women. Many of the attendees are often characterized (rightly or wrongly) as “Mom bloggers.” But in the crowd I ran into a woman I’ve met in NYC several times, and who zigs where others have zagged. Instead of tapping into the power of the mom market, she’s discovered her own niche – “PANKS” or “Professional Aunt No KidS.” Former print beauty editor and marketing communications executive Melanie Notkin is an aunt herself, and was frustrated by the lack of information sources for women who cared about kids, but weren’t their primary caregivers. She started Savvy Auntie in 2008 and has created her own establishment – with a pretty large demographic to back her up. Howard Greenstein: How did you identify the need for your company? Melanie Notkin: Savvy Auntie is a multi-platform lifestyle company for the nearly 50% of American women who are not moms but love a child in their life. At first, the desire to create this company came from my own experience realizing that my nephew and nieces were the most important and happiest aspects of my life and yet I had no resources designed for me. And anything out there was cheesy or old and “auntique-y.” Even as a pretty savvy New York City beauty executive, I felt pretty unsavvy about the important things I need to know about the lives of these children, from changing diapers to who the heck Dora the Explorer was. As a marketer, I saw the potential of the market when I simply looked at US fertility data. 45.1 percent of American women through age 44 do not have children (there’s no data on women 45 plus). 14 percent of those who are mothers have their first child age 35 or over. So there’s a pretty long lifespan for women as aunts without kids of their own even for women who eventually become moms. And that trending is growing and growing, year after year. Plus these women have discretionary income and time relative to moms. So marketers jump at the chance to connect with them. Until Savvy Auntie there was no way to reach them directly. I dubbed this powerful segment: PANK s™. HG: Did you test the market before starting? How? MN : A couple of weeks after I decided to start this company, I gathered a number of women in my apartment to learn attitudes about aunthood. A week or two later, I discovered Twitter and began asking women all over America for their thoughts as @SavvyAuntie . Wow – talk about being able to test in Peoria for no cost! While I was able to plug some of that feedback into the development of the brand, I took my 15 plus years of marketing expertise at the time and jumped in. It’s tough to test a market before it self-identifies. I needed to showcase that PANKs were nearly 50% of American women before this segment realized how much they contribute to the American Family Village and the economy. HG: How did you get your initial funding ? MN: I am completely self-funded and was profitable in my first full year (2008). My late mother left me some inheritance when she passed away 20 years prior. Back then, even as a teenager, I had the foresight to wait for my dream to leverage it. Investing my life savings in me would have made my mother proud. HG: What’s been the biggest challenge in starting up a company? MN: Starting a company. I remember the day I woke up an ‘auntrepreneur .’ It was June 12, 2007. That morning I went to a seminar on business plans. Then I invested in business cards. While I didn’t yet have a name for my company, I felt it was important to invest in identifying my intention. Then I joined other classes and groups. I did everything I could within reason to begin the investment in this dream so I would not back out. I never looked back. HG: How did you find a lawyer, accountant, developer and others to help you create the company? MN: I networked with people I trusted for referrals. My developer, for example, was a recommendation from a former colleague. HG: What tells you your company is on the right path? MN: I learned I was on the right path rather quickly. Twenty three minutes after I launched SavvyAuntie.com I received an email from the digital media buying agency for PlaySkool. Two hours after I launched, I received and email from Sephora. The next day, Disney’s agency sent me an email. And so on. Two years later, the company and its audience to continue to grow. HG: What’s your growth plan? MN: In the two years since launching SavvyAuntie.com, I’ve also introduced Auntie’s Day™ and The Savvy Auntie Coolest Toy Awards. I’ve appeared on national television and have a book coming out on March 22, 2011 with William Morrow/HarperCollins called: The Savvy Auntie Guide to Life – The Ultimate Source for Cool Aunts, Great Aunts, Godmothers and All Women Who Love Kids . Next up is more TV, products and who knows, maybe a movie. There’s no stopping this brand or the sixty million women it potentially serves. HG: What keeps you up at night? MN: Late Night with Jimmy Fallon or a good book. Thankfully, by living my life to my potential, I go to bed every night knowing I’m doing the best I can. New York City – BlogHer – United States – Henry Ford – Marketing Continue reading →

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How to Find Willing Investors

Posted on September 11, 2011 by

Most entrepreneurs who dream big simply don’t have access to the kind of money it takes to realize their aspirations. Enter the professional investor community. But, in order to get investors to open up their checkbooks, you’ll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny and give up a percentage of your company. That’s why it’s a good idea to first ask yourself whether you really need a professional investor at all, says David Henkel-Wallace, a serial entrepreneur who has raised $60 million from VCs. “If you’re starting a web software or mobile software company, you might be able to bootstrap it, which has the advantage that you get to keep all the money you earn,” says Henkel-Wallace. “You could also look into borrowing from friends and family – or even take out a second mortgage – for the same reason.” Dig Deeper: How to Pitch Your Business to Family and Friends Understand What Investors Want If you decide your business can only get to the next level with the aid of a professional investor, then you need to figure out what a potential backer looks for in a budding company, says Martin Babinec, who raised six rounds of funding through the business process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. For one, he says, many entrepreneurs mistakenly think talking to investors involves loans or debt. “It should be clear that when you talk to an equity investor, you’re trading shares of your company that an investor can later sell,” he says. To that end, you need to show how your company is on a path to a “liquidity event,” industry parlance for an IPO or acquisition where the investors get a return on their money. Since not every company will actually go down such a path, “many investors use a portfolio approach, where they hope to spread their risk among several bets,” says Babinec, who now heads up Upstate Venture Connect, an organization that connects emerging technology companies in upstate New York with investors. “An investor may, for example, invest in ten companies, knowing that more than half of those companies will fail to capitalize on their potential. But, if just two of those bets pay off, and pay off big, then everyone comes out ahead.” Babinec says an investor will evaluate a company’s potential along four key criteria: 1. Does the company’s product or service address a large and growing market need? 2. Can the company scale quickly enough to take advantage of that market opportunity? 3. Does the company have a defensible competitive advantage? 4. Can the management team execute on the potential outlined in the first three criteria? In other words, the risk of investing in your company must be offset by the potential reward that can be delivered when your company experiences a liquidity event. “If you want a lot of capital, you’ll need to demonstrate that your company has rocket-ship growth potential,” says Babinec. Dig Deeper: 9 Ways to Make Your Business More Attractive to Investors Look for the Best Fit and Make Connections If your company passes those four tests, your next assignment is to prune down the list of investors who might be interested in your company. To do so, you’ll need to understand that the private company equity markets have become very fragmented, says Healy Jones, a former venture capitalist who now heads up marketing at OfficeDrop, a start-up that offers digital document scanning and filing and raised venture capital late last year. “There used to be just venture capitalists, now there are angels, super angels, micro-VCs, VC, and growth investors,” he says. “As an entrepreneur looking for capital you need to know where on the spectrum of investors your business falls – and target the right potential investors.” VCs, for instance, typically look to invest $3 million to $5 million. Angel investors, on the other hand, may invest just a few thousand dollars. Private equity groups may have tens of millions to invest. So how do you know what the right fit for your business is? Start by networking and building relationships even before you set out to acquire funding as a way to both determine who investors in your area might be as well as to develop connections to them. “VCs highly prefer introductions to new ideas from people they trust as opposed to receiving cold calls from companies looking for money,” says Jones. “The best introductions come from successful entrepreneurs, especially ones that have worked with the VC before.” Your networking should include professionals working for companies similar to yours, says Marc Wright, a serial entrepreneur, VC investor, founder of an incubator and an advisor to early-stage companies. “Look for news in your industry about investments and acquisitions involving companies in the spaces closest to yours,” says Wright. “The goal should be to target investors and even large companies who look for opportunities in your space.” Another suggestion from Babinec of UVC is that you can research who originally backed the public companies in your space. “This is a multiple step process that works you back to the investors who have made money in the space,” he says. This is essential because investors like to invest in areas where they have developed expertise, says Eric Lefkofsky, the co-founder of Groupon who, in addition to founding two companies that went public, has now started a venture fund of his own called Lightbank. “We only look to invest in early-stage tech companies,” says Lefkofsky. “If you had the best idea for a new restaurant, I’m the wrong guy to approach about it. We focus only on the things we know.” Investors, especially in early-stage ventures, also tend to place their bets close to home, according to Don Rainey, a general partner in Grotech Ventures, a VC firm in Washington, D.C. “Being closer geographically is better, but it also differs on where you are,” says Rainey. “In Silicon Valley, you might need to be 15 miles from your investor. In Dallas, it might be 300 miles.” And don’t be bashful about using social media tools to boost your networking efforts, says Wright, who is the CEO of Martinez & Wright, a business media and market data company in Laguna Beach, Calif. “I frequently use news sources and LinkedIn to find people who are connected to an investor target and then tap them for feedback and input on the business and ask what they think investors or buyers might like and dislike,” he says. “If the chemistry is right I’ll ask them for an intro. And if it’s really good, I’ll mention the possibility of a formal role as an advisor.” Dig Deeper: An Insider’s Guide to Venture Capital Financing Share Your Vision Once you’ve finally made some connections to investors who likely understand the kind of company you’re trying to build, you then need to whittle it down to those who share your vision of what’s possible. “As an entrepreneur, you need to find investors that buy into the assumptions you have made about the future,” Rainey of Grotech Ventures says. If you don’t share the same common view of what’s possible, an investor won’t invest with you.” Resources The Internet contains many websites dedicated to helping entrepreneurs navigate the investment community. Here are a few of our favorites: Startable : A blog penned by Jones of OfficeDrop which focuses on the early stage VC and angel environment and the Internet start-up market. Venture Hacks : A good source for fund-raising advice that also includes a list of active angel investors. StartupCFO : A source of advice from a veteran CFO. VC Ready Law : A blog with good resources for entrepreneurs looking to raise capital. Angel Capital Association : A great resource for understanding what an angel investor looks for as well as for finding angels near you. The following blogs written by investors also provide worthwhile information to capital seekers: Fred Wilson : A well-known NYC-based VC. Brad Feld : A good source on angel investing, venture capital and term sheets. Mark Suster : A VC and former start-up CEO, offers advice on raising capital and pitching VCs. Venture capital – Business – Angel investor – Entrepreneur – Investment Continue reading →

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How to Attract Talent to Your Start-up

Posted on August 3, 2011 by Nitasha Tiku

Employees are valuable . So are referrals. That was the thought behind Meebo’s decision to offer a $5,000 reward to anyone who referred qualified potential employees to the company that launched in 2005. The only stipulation? People would only get paid if the candidates got hired. As an instant-messaging and social media service, Meebo never really had trouble finding and attracting talent. They offered employees referral bonuses, posted on job boards and committed themselves to so-called “guerilla recruiting.” But they realized, some time in May of this year, that they had 10 high-level jobs to fill and they hadn’t been using all of the resources available to them to find the best talent. They hadn’t yet reached out to their massive user network. So, Vice President of Human Resources Tom Perrault and his team decided to offer the public the $5,000 prize. “Good talent is going to make the difference in the growth of our organization and in the future,” says Perrault. “So we’re willing to pay for good talent.” The referrals the company got, especially from vendors and external partners were, in Perrault’s words, “spot on,” and the experiment was a success. The moral of the story, though, is not that you have to throw money around to attract top talent. Instead, the takeaway message for recruiting is: play to your strengths (in Meebo’s case, it’s networking), be active, not passive, and get your name out there. This guide will provide a few recruiting tips, as well as what to look for in a new hire and how to entice the best talent. How to Attract Talent to Your Start-up: Face-to-Face Interaction No matter how small the internet has made the world, experts still recommend in-person networking as the No. 1 way to recruit talent. “I’ve done a lot of placing people into positions, and I have never used a job board as a way to do that,” says Rich Sloan, co-founder of StartupNation . ‘Personal [interaction] is so much more powerful and important to me.” Start at your local Chamber of Commerce, which should list information on industry events happening in your area. Don’t stop there, though. Research local industry groups and associations. “Every type of business has their own meetings,” says Martin Zwilling, founder and CEO of consulting group Startup Professionals . “You’ll find people who know your business and are looking for opportunities.” Even if you don’t find employees at these industry events, you will at least make contacts who understand your needs and will put you in touch with other people they know. Or, you could create your own networking events, as Meebo did. Perrault says the company started scheduling Meebo meetups around the world and asking fans and users to come out to rub elbows with the Meebo staff. “We’d say, “Hey, we’re going to be in Chicago. We’re going to be in Japan. We’re going to be in New York. If you’re interested in Meebo, come to XYZ coffee shop,’” he says. At these events, they hand out cupcakes and t-shirts. Once, one of Meebo’s founders even played JavaScript bingo with people who showed up. They wanted to give guests a memorable experience because, says Perrault, “It wasn’t just about recruiting. It was about building a community, and people who show up to those things have a heightened interest in Meebo.” Even if you don’t have a huge network of people to advertise your meetups with, you can always try becoming an official Meetup group to get the word out. And don’t forget about schools and universities. Job fairs abound, so it’s wise to get in touch with career counselors at both local schools and schools that have high-performing graduates in your field to see how you can get involved. “Every university makes efforts to get interconnected with the entrepreneur community,” Zwilling says. “They have outreach programs, and the people who are involved are the people who will find you interns and people who will be graduating soon.” Meebo judges and sponsors programming competitions at schools like MIT, Stanford and Berkeley, so they can see firsthand where the real talent is. Dig Deeper: How to Improve Your Hiring Practices How to Attract Talent to Your Start-up: Use the Internet Wisely No one wants to sift through endless responses from a job board listing. You may find the right candidates in the end, but you’ll waste precious time separating what Perrault calls “the weak from the champs.” This is not to say, however, that you can’t find good talent for your start-up online. In the era of social networking, there are tons of sites dedicated to matching qualified applicants with the right employers, including Startupers , VentureLoop and Startuply . You can even try InternshipIN to find people while they’re still in school. Make sure, when you register for these sites, that your profile reflects the spirit of your company. That goes for your Facebook presence, too. If your business is casual and fun, you’ll need people who are attracted to that type of environment, and your time will be best spent if you find these people from the very beginning. Dig Deeper: How to Use Social Media as a Recruiting Tool How to Attract Talent to Your Start-up: What to Look For “There are certain kinds of people who thrive in an environment with the risk profile and anarchy of a start-up,” says Sloan. “Start-ups demand great working relationships. There can be no issues.” This means the cultural fit is equally as important as what’s on a person’s resume. Zwilling recommends looking for people who are results-oriented, people who can tell you what exactly they’ve done in their careers. As you probably know already, responsibility gets pretty evenly distributed in a start-up with a small staff. You need to know that people can produce when given that responsibility. “I hear a lot of people talk about what their job description is, but I’m looking for results,” Zwilling says. He also recommends looking for someone who is “attracted to the promise of a big win.” The road may be rough at first, but someone who’s ready to see your business through and can tell you why it’s worth it to them is someone you want on your team. If your business requires long or odd hours, look for someone whose other commitments aren’t going to prevent them from contributing. And, most importantly, you should steer clear of people who list being tired of the corporate world as one of their main reasons for applying. That doesn’t automatically mean they’re ready for the start-up world, either. Preempting these issues is key, so Sloan suggests putting all potential employees through a training session. He says, “The test period will reveal what the dynamics really are.” Dig Deeper: The New Rules of Hiring How to Attract Talent to Your Start-up: What to Offer As a start-up, you might not be able to offer top talent all the benefits and employee perks that a big corporation can, but what you can offer is the promise of purpose and independence. According to Sloan: “People get involved in a start-up for three reasons. One, they like creating, being part of something new. Two, they want to participate in the upside. Three, they want to live a meaningful life, and the closer you are to the success or failure of a business, the more meaning and purpose you feel.” Without a corporate ladder to scale, employees at start-ups can also start out with higher job titles, which can be a big incentive for driven individuals. No matter how driven a person is, though, he or she will still want to be reassured that the company will be around a few years from now. Sloan suggests being open about your financial situation, discussing your business plan and demonstrating knowledge about your place in the industry. You don’t want your new hire to face any surprises during the first few weeks. In addition to promising purpose and more important roles, many start-ups have another secret weapon to help them secure top talent: a casual and fun working environment. If you’ve got one, don’t be afraid to show it off. Meebo puts all its new hires through a three-hour work simulation, in which new hires not only get to demonstrate their skills, but they get to see how the office operates day-to-day. “If we get them in the door, we have a fighting chance,” says Perrault. “When we do the debrief, every single person says, ‘It’s so easy to see the enthusiasm of your employees, and it’s infectious.’” Dig Deeper: 10 Employee Perks We Love How to Attract Talent to Your Start-up: Always Be on the Lookout Don’t lose recruiting momentum just because you’ve filled all current positions. “Even if you don’t have an opening right now, eventually you’ll have an opening, and you need to get people interested, so by the time you’re ready, they’ll want to join you,” Perrault explains. “If you’re not recruiting all the time, you’re not doing it right.” Sloan suggests keeping a running list of all the people you meet or hear of who impress you. He calls it a ” Superstar list .” “It’s good to always keep track of outstanding people,” he says, “because you never know how or where you can plug them in.” Even when you’re not actively recruiting, you can still engage talented people in non-traditional forums. Meebo posts JavaScript puzzles on its site, and every once in a while, when someone does particularly well, Perrault’s team may contact that person to discuss job opportunities at Meebo. “It’s so clear to everyone here that recruiting is not just an HR job. Everybody here understands recruiting is the lifeblood of our organization,” Perrault says, “and that makes for a richer and stronger recruiting process.” Dig Deeper: Never Read Another Resume Meebo – Instant messaging – Employment – VentureLoop – Facebook Continue reading →

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