Are Entrepreneurs' Brains Wired Differently?

Many practitioners have long claimed that entrepreneurs think more creatively than the rest of us because they are “wired” differently. Recently, academic researchers have begun to take this notion seriously.

A research team of neuroscientists and business-school scholars from Italy and Switzerland recently used an fMRI to capture images of the brains of entrepreneurs and managers who undertook a task that involved searching for alternative approaches to solving a problem – something academics call “exploration.” The researchers found that when the entrepreneurs sought out novel courses of action, they were more likely than the managers to use the right side of the prefrontal cortex, which is associated with creativity. The managers tended to use only the left side, which is related to logical thinking.

Why did the entrepreneurs’ and managers’ brains approach the problem differently? As one of the authors writes, the different experiences of entrepreneurs and managers might lead them to think differently. The types of situations that entrepreneurs routinely confront might condition their brains to approach problem-solving differently from managers, who regularly face different experiences. After all, much research shows that the human brain is highly “plastic” – it changes in response to skills and experiences.

The Swiss-Italian research team found some evidence to support this explanation. Managers whose jobs were less routinized tended to approach the tasks more similarly to the entrepreneurs than those whose jobs were more routinized.

But the entrepreneurs might approach the problem differently because they are “hard-wired” to use creativity. As the study’s authors’ acknowledge, people who are born with a tendency to be creative may be more attracted to entrepreneurship than management.

Genetics might be responsible for that “hard-wiring.” Research I conducted with a colleague from the University of Cyprus on more than 3,000 British twins showed the same genetic factors that account for having a “creative personality” also make people more likely to identify new business opportunities and to start companies. Our earlier research showed that the same genetic predispositions that make some people more likely than others to seek novelty also affect their odds of being in business for themselves. Furthermore, in research we undertook with a group of molecular geneticists, we found that a version of one of the genes that governs the level of dopamine in the brain, and which is associated with the tendency to search out novelty, was more common among entrepreneurs than non-entrepreneurs.

Hormones might be another pathway through which genetics influence how entrepreneurs think. A 2006 study showed that men with higher base testosterone levels were more tolerant of risk and more likely to be entrepreneurs than men with lower base testosterone levels. A 2011 study showed that entrepreneurs who had been exposed to more testosterone when in utero had faster growing firms than those who were exposed to less of the hormone.

As academics explore these questions, we will learn more about the role that nature and nurture play in accounting for differences between entrepreneurs and the rest of us. While future research will no doubt show that nurture plays a significant role, my hunch is that it will also reveal that the intuition of many practitioners is right. Entrepreneurs are “wired differently” from the rest of us.

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).

Don't Love Your Job? Fix the Job You're In.

Considering quitting? Maybe you don’t need a new job – just a new approach to the one you have.

“Caring” is rarely listed on job descriptions. It is seen as a soft skill and not core to success. In some cases, it’s even seen as inappropriate in the workplace. But while we’re not required to care for our colleagues, clients, or other people, caring can be a difference maker. By understanding the role caring can have in your workplace, you can transform your role and your relationship with colleagues, potentially giving you the ownership over your job you need to thrive.

Researchers Amy Wrzesniewski, Jane Dutton, and Gelaye Debebe were particularly interested in this phenomenon when it came to what are known as “dirty” jobs, and looked at maintenance staff at a hospital, the folks who clean up after the sick, dying and recently deceased. They wanted to know how these cleaning professionals found purpose in their work, especially as research confirmed that they were treated with disrespect or disdain. Doctors, for example, would regularly drop their gloves on the floor after doing an exam rather than disposing of them properly. Others complained of nurses avoiding cleaning up bodily fluids and just dumping them on the floor so they became the responsibility of the cleaning team.

But the researchers also discovered that many of these cleaning professionals found ways to care for patients that created purpose in their work. The majority of cleaners expressed genuine concern for patients and their families, and responded to patients’ requests and took time for friendly chats.

None of this was part of their job description, and in many cases could be frowned upon by some managers. However, they weren’t simply doing the job and clocking out—they were taking ownership of and finding ways to craft their jobs to make them meaningful. They had changed their relationship with others to be able to provide care and, in the process, incorporate new tasks. They had redesigned their jobs to suit them rather than be a victim of their constraints.

Job crafting is a conscious or unconscious process of redesigning your own job to better align with your values, strengths, and passions.

It is a relatively new area of study that is part of the broader, nascent field of positive psychology. As is clear from these stories of hospital workers, what brings meaning to a job is not the job itself, but what we bring to it. In observing professionals in some of the toughest environments, such as the cleaning people, they are uncovering the natural ways people adapt to bring meaning to their work.

From The Purpose Economy, released this week.

Traditional thinking says that the best way to find more meaningful work is to find a new job. But job crafting points to another solution—changing the job you’re in to better meet your needs. Positive psychologists have gone from observing organic job crafting, to documenting the process, to proactively facilitating job crafting. The results are remarkable and point to the fact that we have a lot more control over purpose at work than we may realize. Within job crafting, professionals can redesign not only their mindset, but also their tasks and relationships. It is a process that anyone can use to boost purpose at work. And the best part is that applies to any role—from hospital administrator to maintenance worker.

Task crafting can entail one of three approaches:

1. Task crafting. By redesigning the tasks in a job, you change the rules, taking on more or fewer tasks, or changing its scope. One of the most successful examples of this in my own work was in adding writing to my responsibilities. I made time on my commute to write blogs and articles, which gave me a creative outlet. It wasn’t required of my job, but it added a lot of depth to my work, and allowed me to explore issues that weren’t part of my day-to-day

2. Relational crafting. Through changing your relationships with your co-workers, clients, and others in your work environment, you can bring more purpose to your work as a whole. It is usually about changing the nature or depth of relationships and might involve the simplest of changes, such as taking someone to lunch once a week, or trying to have more meetings in person, rather than over email or the phone.

3. Cognitive crafting. This aspect is about approach. Workers can connected each task with its purpose. It is about remembering why you are cleaning the room, conducting an audit, or designing a website.

Done well, this process stems from the ‘who,’ ‘how,’ and ‘why’ of what drives purpose. Once you have that self-awareness, it is possible to intentionally redesign your job to make it substantially more rewarding. It can move you from being on the verge of quitting to finding the same job rich in purpose.

Excerpted from The Purpose Economy, released April 2014. 

Aaron Hurst is an award-winning entrepreneur and globally recognized leader in fields of purpose at work and social innovation. He is the CEO of Imperative and founder of the Taproot Foundation which he led for a dozen years. Aaron is a popular author and a regular speaker at universities, conferences and companies. 

Obsessed About Revenue? Don't Forget to Check Gross Margin

So many middle market companies focus on growth. That’s not a bad thing at all. But they also need to understand a term called gross margin.

Investopedia defines gross margin as, “the number representing the proportion of each dollar of revenue that the company retains as gross profit after incurring the direct costs associated with producing the goods and services.”

Related: How to Calculate Gross Profit

For example, if a company’s gross margin for the most recent quarter were 35 percent, it would retain $0.35 from each dollar of revenue generated, to be put toward paying off selling, general and administrative expenses, interest expenses and distributions to shareholders.

When you’re looking at gross margin you also need to analyze the inventory investment that’s required to fund gross-margin dollar growth.

An important principle here is that inventories should rise less than the sales growth rate of a company.

A unanticipated spike in inventory. Companies that have an unplanned significant rise in inventory may be setting the stage for impending cash-flow difficulties.

Let’s talk about a company we know: Gross-margin dollars were growing at a high-teen double-digit growth rate. This resulted in substantial earnings growth that everyone was cheering about. The company, however, was constantly bumping up against its credit line and was losing the capacity to borrow from its bank.

An analysis of the balance sheet revealed that the inventory investment was growing significantly faster than the company’s growth in gross margin dollars. Indeed, with average inventory growing 40 percent over the previous year, the company was literally overinvesting in inventory relative to the return in gross-margin dollars.

We also discovered that a significant segment of inventory was obsolete. Management had not been willing to take the appropriate action to liquidate and turn it into cash, because this would have had a negative impact on gross-margin dollars.  

The end result of this is that the excess inventory created a cash-flow issue that ultimately forced the company to borrow additionally against its credit line.  This, in turn, created more problems than if the firm had dealt with the obsolete inventory much earlier in the sales cycle and created additional cash flow.

This analysis gives us an insight into how management is deploying working capital and opportunities to reduce inventory and improve cash flow.

Calculating gross margin return on investment. And it brings us to a critical variable: gross margin return on investment (GMROI), defined by Investopia as “an inventory profitability evaluation ratio that analyzes a company’s ability to turn inventory into cash above the cost of the inventory. It is calculated by dividing the gross margin by the average inventory cost and is used often in a number of industries.”

This is a useful measure, because it helps the investor, or management, see the average amount that the inventory returns above its cost. A ratio higher than 1 means the firm is selling the merchandise for more than what it costs the company to acquire it. The opposite is true for a ratio below 1.

GMROI is an important measurement to evaluate a company’s efficient use of its inventory investment.  It can also be used to evaluate segments of its inventory such as product lines or product categories. GMROI standards can differ by industry and it is important to understand how your company’s performance compares to the industry average.

The importance of managing inventory investment is a significant factor in improving cash flow and profitability of companies of all sizes.  

It’s critically important for middle-market companies that have working-capital challenges and that require additional funding to operate the business efficiently and effectively.

Revive That Old-Fashioned Extra: Excellent Customer Service.

Value-added service has become all too pricey for small businesses. Yet, everyone knows how important it is to exceed customer expectations. Instead of adding more services, why not try adopt something of value that's unique -- making your business service unexpectedly delightful?

Here are six simple, inexpensive ways to enchant your customers while enhancing your bottom line:

Related: The Skyscraping Cost of Bad Customer Service (Infographic)

1. Charm those who are important to your customer. Miller Brothers, an upscale men’s clothing store in Atlanta, put a large colorful gumball machine on a table at the store entrance. Beside it was placed a large bowl of shiny pennies. Guess where Junior goes when Daddy is trying on trousers? Guess which men’s store is the buzz at cocktail parties? Sales are up for the boutique store “with the gumball machine.”

2. Don’t be afraid of the whimsical. Hotel Monaco is a medium-priced hotel chain with properties in many U.S. cities. While most hotel chains are struggling, Hotel Monaco is on the rise. It seeks to enchant business traveler guests with quirky additions. The bathrobe is not boring white; it is a leopard- or zebra-skin print. Guests can have a goldfish in their room (taken care of by the housekeeper). And, instead of the proverbial mint on the pillow at turndown, guests find  an unexpected treat (a foreign coin, a flower, a lottery ticket or who knows).

Related: 3 Ways to Grow Your Business By Focusing on the Customer

3. The way to a customer’s purse is via the heart. Nicholson-Hardie is a nursery and garden center in Dallas known as the “garden center with the cats.” Why? Lounging on top of the large checkout area might be one of two large calico cats. Beside them is a business card holder with their business cards: Frankie Cat and Sammie Cat.  And their job titles? The Rat Pack.  Ask any customer about the garden center and the cats will be a part of the reported charm.

4. Use occasional magic. Kauffman Tire in Woodstock, Ga., enjoys delivering a special form of magic. When a customer walked in the store to purchase a tire, he was warmly greeted with,“Welcome back, Mr. Steve.”  He was blown away since he not visited the store in well over a year.

When he pressed the clerk, the clerk revealed the secret technique. “When you pulled in our parking lot and I did not recognize your vehicle, I plugged your license plate number into the computer and cross referenced the name with our records.  So, I knew you were a prior customer by the time you got to our front door!”  

5. Show your trust. The wait staff at Vincenzo’s Ristorante in Omaha, Neb., greet patrons at their table with a pitcher of “honor wine,” an excellent Chianti. “Enjoy this if you like,” she said to a group of us recently. “We charge by the glass. At the end of the meal just let me know how many glasses you had and I’ll add it to your bill.”

When we asked the owner on our way out how many patrons drink the Chianti, he smiled. “Most do," he said. "It’s one of our best features!”

6. Personalize the service experience in surprising ways. When the "toner is low" sign flashes on my laser printer, I pull out the cartridge, ship  it to Toner Service Inc. and within 48 hours receive a refurbished cartridge for about half the cost of a brand-new toner cartridge. A "personalized" form letter accompanies the returned laser cartridge.

But one time, a letter contained a handwritten P.S.: "I'll bet you’re real proud of those Cowboys!" At the time I lived in Dallas and the clerk or packer or someone noticed my business address and scrawled a little "value-added" note to the letter.  

7. Make the details matter to your customers. I had breakfast at the Park Inn in Mechanicsburg, Penn., before heading off for a keynote. The breakfast was as great as the service from the waitress Sandy. After bringing the check, she presented me with a complimentary go cup of coffee. But, it was her words that put the cherry on top: “This is our gift to you.” Innovative service should be as simple as it is unexpected.  

Richard Branson on Why Making Employees Happy Pays Off

Editor's Note: Entrepreneur Richard Branson regularly shares his business experience and advice with readers. Ask him a question and your query might be the inspiration for a future column.

Q: Why is employee happiness important? -- Cristhian Rojas

Happy employees are central to the success of a business. We all instinctively know this, but it can be hard to pinpoint why. Nobody would argue that employees should be sad and downtrodden, yet it seems as though some businesses and their managers set out with the intention of presiding over a group of miserable people, and then succeed in doing just that.

First, the scientific evidence: Research released this month by the University of Warwick in Britain confirms that on average, happiness makes people 12 percent more productive. One of the researchers, Andrew Oswald, said in a press release: “Companies like Google have invested more in employee support and employee satisfaction has risen as a result. For Google, it rose by 37 percent; they know what they are talking about. Under scientifically controlled conditions, making workers happier really pays off.”

How can you make your employees happier? The researchers offered their test subjects chocolates and fruit and the chance to watch comedy clips before they set them to work. A business can’t rely on snacks, unfortunately -- eventually the effect would wear off. The most common rewards that businesses offer, bonuses and raises, also have a limited effect. After all, there are lots of people who are very well paid, yet miserable in their jobs.

Whether you’re launching a startup or managing an established enterprise, you have to go out of your way to make people happy -- it doesn’t just happen. Create this job for yourself, just like the Himalayan kingdom of Bhutan created the Gross National Happiness Commission, overseen by a secretary whose task is to look after the population’s happiness.

You need to think about what your crew needs to stay engaged, and what motivates them in the long term. The basics are well-designed offices with plenty of sunlight, stimulating tasks to work on and a fair reward. Research also shows that a healthy workforce is a happier one -- people are more productive and out sick less often. Building on that, a few years ago we invested in Virgin Pulse, a business that is focused on helping companies to encourage their employees to be more active through a reward program.

We at Virgin also find a flexible working policy to be very effective. These guidelines, which we have introduced at almost all our companies over the past few years, effectively mean that as long as they do their work, our employees can work whenever they want, from wherever they want.

It wasn’t easy to put this system in place: Our team invested in research beforehand to make sure it was workable, and once we all agreed, we had to encourage a change of culture across our offices. Yet that was a small price to pay, because it’s what our employees wanted, and we knew that demonstrating respect and trust in our employees would boost their happiness levels, and in turn, their productivity and creativity.

But beyond creating good policies, you need to think about what makes your company different, and help your employees to celebrate that. If it’s the sense of mission, then give them the tools they need to keep in touch with how your business is progressing toward its goals. If it’s engagement with customers, then empower your people to take the lead as they help your clients. If you need clues about where to begin, pay attention to where the happiest employees are in your business, since this can indicate that something is working very well -- something that can be replicated elsewhere.

And finally, keep in mind that you became an entrepreneur because it’s fun. So celebrate your achievements and those of your employees, because each one is a step on the road to your business’ success. If you’ve been working on a project that has required people to work long hours, when it’s done, let loose a little and give people a chance to reconnect outside the office.

Last year Virgin Management moved from its London office to a new spot in Little Venice, West London. It was a big few months for the team, who put in some long days and even longer nights preparing for the move. After the job was done and everyone had settled in, we decided to throw a pirate-themed party to thank the group for all the hard work.

We had a great time! But the next day we found ourselves on the front page of the local papers, because the neighbors had called the authorities to complain about the sound of our steel drums on the roof terrace, which perhaps played a little later into the evening than they should have. While we did apologize for the inconvenience, that was a night nobody in the office will forget, and it did wonders for reviving our team spirit.

You will probably find your position as manager of jolliness very satisfying. A few days ago someone sent me a link to a video made by Virgin America staff -- a recreation of the video for Pharrell Williams’ song “Happy." In turn, that display of employee satisfaction made me very happy. (And by the way -- nice moves, guys!)

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Why a Corporation Without a Soul Is Just a Machine

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The recent Hobby Lobby vs. Sebelius case has stirred up a lot of controversy. Twitter is filled with people crying out for “justice” and making snide remarks about “their body” and the “corporation has to pay for what I want if I work there.”

But underneath the rhetoric lies a very grave issue that no one seems to be addressing. Arianna Huffington mentioned it very quickly in a Tweet but very few people even caught it.

Does a corporation have a soul?

In theological terms, the soul is often referred to as a the seat of our emotion and will. It’s where we make decisions, uphold our value systems, create our worldview and more. With this definition in mind, what would a corporation look like if the soul completely cut off. Considering a corporation is made up of people, and people possess a soul, now we have a very important issue on our hands and no one seems to even want to mention it.

Related: Why Faith Belongs In Your Workplace

If you remove the soul from a corporation, it would be robotic and it seems to me that this is what the government desires: corporations that don’t care, think or have any will or emotion. Ironically this seems to be their typical agenda for society as a whole. People who are fearful are very easy to control. Neurologists teach that the emotion of fear often leads to destructive behavior. It also leads to people “checking out.” Trillions of dollars each year are made in the industry of adjusting people’s behavior, emotions and will. And people “check out” everyday, refusing to take responsibility, have any form of moral conviction or values.

Is this the next attack on business?

If Arianna Huffington thinks that the best way to build a company is to create an autonomous machine that has no will, emotion, value or conviction, we have a really big problem on our hands. Is this how we should be building our economic foundation in America? Because the very core of every company started in a capitalist society is driven by passion, dreams and the pursuit of bringing value to the marketplace, change and value to our fellow human beings. If you disconnect what we can feel, value and have convictions about in our corporation, you now have full-blown communism.

Related: Supreme Court to Decide Whether Businesses Have Religion

Is the issue with Hobby Lobby controversial? Yes it is. But so is good business.

We should ALL be able to have conviction, morality and values attached to how we run a company, what we will and won’t give our money to and what we’ll pay for when it comes to insurance. Hobby Lobby already pays for a large amount of the contraceptives used by their employees. What they don’t want any part of is paying for what is against their moral convictions and values. If the government doesn’t want to pay for all contraceptives and take all moral responsibility for their results, than each corporation should be able to decide what they will and will not pay for. Employees have a free will as well, and can choose who they want to work for and not work for. THIS would require people who think, care and feel.

Ironic isn’t it? When we begin to speak about soul issues, responsibly enters the picture. It is my belief that this is the real issue at question and nobody wants to talk about it. This is why faith works, at work.

Related: The Winning Traits of Faith-Based Leaders

The author is an Entrepreneur contributor. The opinions expressed are those of the writer.

Sandi Krakowski is a Digital Media Marketing Expert noted by Forbes as a Top 20 Women Social Media Influencer and a Top 50 Social Media Power Influencer. Sandi is known in the marketplace for living an outrageous life, giving to many causes, writing, cooking and enjoying her family while serving over 2 million clients. She has a historic trackrecord of building an online social media presence with more than 700,000 clients connected to her in under 19 months. But the core of who Sandi is is revealed in her powerful teaching on faith, belief and the power to #BEMORE in all areas of life. You can find her at: http://www.arealchange.com/

Exit Strategy Is An Oxymoron

In early meetings, if a VC ever asks you what your exit strategy is, you should run, not walk to your nearest…um…exit.

You want your investors to be more curious about how you're going to enter a market than how they're going to exit their investment.

Thankfully, I hear much less talk about exit “strategies” in the startup world than I used to.  Back in the day, no business plan was complete without a discussion of exit strategies.  And, they almost invariably came down to the same two options: Here are the list of companies that might buy us…and we could go public! 

Today, most tech entrepreneurs don't even write business plans (which is good, because nobody reads them), let alone have a detailed discussion on potential exit strategies.

Here's why I think an exit strategy is an oxymoron.

The purpose of a business is to build something of value for customers — which in turn creates value for stakeholders.  When you're walking out onto the field, you should be asking yourself “how do I best play this game?” not “Hey, once the game is over, how do I exit the arena?”

Planning your exit is a good thing when entering airplanes, theaters and bar brawls (of which I have no clue, I've just been watching too much Banshee) — not when entering a market.

My advice:  Spend your calories crafting strategies for how you will build value, how you will connect to potential customers — and how you will differentiate yourself from everyone else.  Leave the exit planning for when you actually need to figure out an exit.

By the way, I have no problems with startups exiting.  Happens all the time, and is part of the circle of life in the startup world.  I've been on both sides of the table (sold a startup, acquired some startups).  My problem is when entrepreneurs are forced to unnaturally focus on the exit -- and mistakenly calling such things a "strategy".  

Expectations versus reality: 8 lessons from the first year as CEO

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I started working on Foundersuite in the Fall of 2012, and we launched our MVP in early 2013. Prior to this, I'd spent 10 years consulting to startups as a fractional CFO / BD / Ops guy, so I thought I had a pretty good idea of what to expect for my first real rodeo as startup CEO.

I was completely wrong. Here are eight areas where reality diverged the most from my expectations.

1. Identifying customer needs is only a fraction of the product-market-fit battle.

I'm a fan of the lean startup model and we are diligently striving to "build things that people want." But identifying customer needs and creating a solution for those needs is only part of the equation. The other half is removing the 1000 small friction points and barriers to adoption, which is in itself a Sisyphean task.

For example, we launched our Investor CRM product as a tool to keep track of investor discussions- it’s basically a way to bring some “order to the chaos” of fundraising. It’s a slick tool, built on top of APIs from AngelList, LinkedIn, Google Calendar, etc., and we were getting a lot of love-mail when users first signed up, but ongoing engagement was anemic.

It wasn’t until we probed deep via 1-1 calls that we discovered a lot of “blockers” to adoption—for example, many users already have lists of target investors they’ve collected in excel, so we needed to make an import function. As another example, people told us that since the CRM was an empty, blank slate, they didn’t know where to start; so we will soon be pre-populating it with “starter packs” of investors. It’s an ongoing process, but the good news is that every time we remove a major hurdle or friction point, we see a meaningful spike in adoption. Instant gratification!

2. Nobody gives a sh't about what you are doing (at least at first).

IMO, there's an entire generation of entrepreneurs who have a skewed perception that "a great product markets itself." That's bullshit. Sure, there are a few born-viral products like Mailbox or Pebble, but these are the extreme exceptions, not the norms. Most startups, even really good ones, have to make a ton of noise and hustle like hell to get anyone to pay attention. The founders of Xobni put it best a few years ago: "nobody cares about your stupid little startup."

Naturally, I thought we'd be different, that we’d be one of the immediately-viral outliers; I mean, we were a startup making software for startups-- how cool is that, right? Surely we would launch and immediately hit the hockey stick ramp...right?

We did get a nice little bump in adoption when we debuted at Launch.co and were written up in VentureBeat. But the growth spike was short lived, and like most startups, we had to start grinding away; we had to start building the business, brick by marketing brick; we had to, as Paul Graham would say, do things that don't scale.

In our case, this meant building distribution partnerships with incubators, co-working spaces, hackathons, etc. This is high-touch and long sales cycle relationship work (it takes us 2-3 months on average to close each deal); but it’s an effort we believe will lay a solid foundation for future growth.

3. Early evangelists are worth twice-- no, make that 3x-- their weight in gold.

There's a great quote by Brian Chesky of Airbnb where he says: "it's better to build something that 100 people love than 1 million kind of like." It's great advice, and we definitely didn't focus enough time or energy on cultivating “champions” in the early days; instead, I was addicted to vanity metrics like page views.

Why are these early, passionate users so insanely important? Many of the reasons are obvious: they tend to tell others (= free marketing), and they give you really valuable feedback on your product. But the real reason they're worth 3x their weight in solid gold is because their positive notes of encouragement will keep you going every time you take a beating by the universe (and this happens with surprising frequency). I’m pretty sure there’s a feedback faerie out there that knows exactly when to fire over a positive, encouraging note.

Bottom line, the next time I launch a startup, I will religiously spend 75% of my time hanging out with early evangelists, really getting to know them, and making them happy. I'm playing catch-up now.

4. Some people are just not that into you.

Cold reality: many of the people you really want to like you / your company / your product, simply won’t. This came as a something of a shock, since in my previous career as a consultant, I enjoyed really close relations with my clients and was consistently closing upwards of 75% of new prospect inquiries (probably since they were coming pre-qualified as referrals).

But marketing a consulting business is very, very different from marketing a SaaS product, and it’s taken some time to get used to the level of failure / rejection. With Foundersuite, I'm lucky to hit a 25 - 30% success rate with my partnership/BD work. To put it in perspective, this means that literally 7 times out of 10 that I pursue a distribution deal, I get a “no” (or more likely no response at all).

This was hard to adjust to at first, as I tend to get obsessive about winning a deal. It consumes me. For example, there’s an incubator in Palo Alto that we’ve been talking to for months about partnering up with (and we’d even got to a soft verbal "yes"). But then everything suddenly went silent, and it drove me f’ing nuts.

I've now come to realize that although persistence is indeed a critical trait for entrepreneurs, at some point it’s time to recognize when a deal's not going to happen. In short, don’t let “Deal OCD” become a detriment to your overall business.

5. A full sales funnel cures all ills.

I've learned that the best remedy to #4 is to keep the top of the sales or BD funnel overflowing with prospects; in other words, it's all just a numbers game. I've come to view BD work like dating, and as with dating, there are infinitely more potential prospects / partners out there in the world than you could possibly tackle in a lifetime. So when you’re chasing a target that's "just not that into you" move on, and quickly. Move on, and sometimes you'll even find they come around later (always a nice surprise). 

6. Don't sell the product-- sell what users can do with the product.

This is borrowed / stolen directly from Steve Jobs, and it's something I have to beat into my brain every day. There are numerous layers and nuances to it: pitch the benefits not the features; sell the "why" vs. the "what" or the "how."

Ashton Kutcher’s motivational rant in the movie Jobs sums it up nicely: "You can make a great product; but you have to convince people that what you're selling is greater. We're not selling computers; we're selling what they can do with a computer. A tool for the mind. And that, ladies and gentlemen, is limitless. Because people will never stop believing that they could get more out of something; that no matter what you dream, you can do it. And Mac will help you get there." ‘Nuff said.

6. “Thought leaders” are like supermodels—great if you can land one, but…

Our original marketing plan was based on a variation of what Chris Dixon calls the "bowling pin strategy"-- we would get tech influencers and thought leaders to adopt our product, and the startup masses would follow suit. Sounds great in theory, but getting a Paul Graham or equivalent to trial, adopt, use, and endorse your product has about the same probability of success as getting Oprah to plug your book. In short, the odds are long, and although we did land some partnerships with luminaries like TechStars, Launchrock and Startup Weekend, these deals took months of nagging / begging / calling in favors; these guys are simply so bombarded with stuff, its all just white noise.

Instead of adding to the din, we started reaching out to areas of the startup ecosystem where the noise was significantly less; we started pinging incubators, hackathons, and co-working spaces in places like Atlanta and Pittsburgh and Indiana and Hungary and Australia. Dozens or even hundreds of areas have thriving entrepreneurial communities where the need for startup productivity tools is huge; the hunger is real, and we've seen fantastic adoption.  The lesson here is to skip chasing "trophy partners"-- like trying to date a supermodel, they're expensive, time consuming and a hassle to deal with when you do land them. Instead, chase those who need you the most.

7. Building product is waaay more fun than expected.

In my next reincarnation cycle, I want to come back as a product manager. I had no idea how cool this job was until I was forced to step into the role when my original PM left to launch his own thing.

I’ve found that successfully completing the cycle of idea -> prototype -> feedback -> design -> build -> launch -> feedback -> iterate -> collect payment is hugely rewarding and gratifying; I think I'm rather addicted. I'm pretty sure it taps the same pleasure centers in the brain as winning on a slot machine.

8. People will surprise you in awesome ways.

If you've read this far, you'll notice that most of the lessons learned involve accepting failure or overcoming roadblocks and rejection. But a nice takeaway is that people-- often strangers-- will surprise you in delightful ways, too. Literally as I'm writing this, a Foundersuite user emailed me to say he just posted a glowing review / offer on the Facebook page for all Startup Weekend Organizers.

This is a guy who, on his own volition, decided to promote us to a powerful set of folks who collectively touch tens of thousands of entrepreneurs and potential customers. So cool. But it's not that unusual…if you're doing something interesting, and doing it for the right motivations (e.g. ours is that we want to make tools that help entrepreneurs succeed), then people will go out of their way to help. It’s a beautiful thing.

Good luck and thanks for listening,

This is a guest post by Nathan Beckord, CEO of FounderSuite.com

5 Startup Hiring Mistakes That Can Crush Your Culture

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AppId is over the quota

Remember your first business loan? Or, if you're like many entrepreneurs, you may have initially bootstrapped your startup by buying some stuff on your credit card. You were excited and apprehensive: Excited because now you had the cash to invest in your business, apprehensive because you had just taken on a debt you would have to repay.

But that was okay, because you were confident you could create more value than the interest you would pay. Even though you eventually have to pay off a financial debt, gaining access to the right resources now often marks the difference between success and failure.

That’s true for financial debt – but it’s almost never true for culture debt. 

Culture debt happens when a business takes a shortcut and hires an employee with, say, the “right” the skills or experience… but who doesn't fit the culture. Just one bad hire can create a wave of negativity that washes over every other employee, present and future – and as a result, your entire business.

Unfortunately the interest on culture debt is extremely high: In some cases you will never pay off the debt you incur, even when a culture misfit is let go or leaves.

Here are five all-too-common ways you can create culture debt that can keep your startup from achieving its potential:

1. You see the ivy and miss the poison

The star developer who writes great code… but who also resists taking any direction and refuses to help others… won't instantly turn over a new interpersonal leaf just because you hire him.

The skilled salesperson who in the short-term always seems to outperform her peers… but who also maneuvers and manipulates and builds kerosene-soaked bridges just waiting to go up in flames… won’t turn into a relationship building, long-term focused ambassador for your company just because you hire her.

The interview process is a little like a honeymoon. You see the best the candidate has to offer. If a prospective employee doesn't look like a great fit for your culture before he is hired, he definitely won’t be after he’s hired.

Never risk making a deal with the culture-fit devil. The soul of your company is at stake. Seriously.

2. You discard the attitude and play the skill card

Skills and experience are worthless when not put to use. Knowledge is useless when not shared with others.

The smaller your company the more likely you are to be an expert in your field, so transferring those skills to new employees is relatively easy. But you can't train enthusiasm, a solid work ethic, and great interpersonal skills – and those traits can matter a lot more than any skills a candidate brings.

According to this study only 11% of the new hires that failed in the first 18 months failed due to deficiencies in technical skills. The majority failed due to lack of motivation, an unwillingness to be coached, or problems with temperament and emotional intelligence.

Think of it this way: The candidate who lacks certain hard skills might be a cause for concern, but the candidate who lacks the beliefs and values you need is a giant culture debt red flag.

3. You try to sell a used car

It’s tempting to over-sell a candidate on your company, especially when you desperately need to fill an open position and you've been recruiting for seemingly forever.

Don’t sell too hard. Great candidates come prepared. They've done their homework. They already know whether your company is a good fit for them based on what they've read about you online. The really great recruits might have been stalking your company for many weeks or months -- seeing what the company feels like.

Describe the position, describe your company, answer every question, be candid and forthright, let your natural enthusiasm show through… and let the candidate make an informed decision. But, don’t oversell.

The right candidates recognize the right opportunities – and the right cultural fit. If you have to try too hard to convince someone, and the love is unidirectional, it's not setup for long-term success.

4. You mistake the rumblings for hunger

Nothing beats a formal, thorough, comprehensive hiring process… except, sometimes, a dose of intuition and gut feel.

At my company HubSpot (grew from 0-500 employees in 6 years) there are five key attributes we value:

· Humble. They’re modest despite being awesome. They’re self-aware and respectful.

· Effective. They get (stuff) done. They measurably move the needle and immeasurably add value.

· Adaptable. They’re constantly changing, life-long learners.

· Remarkable. They have a super-power that makes them stand out: Remarkably smart, remarkably creative, remarkably resourceful…

· Transparent. They’re open and honest with others – and with themselves.

In short, we look for people with H-E-A-R-T, because they help us create a company we love. So we always weigh our impressions against more qualitative considerations. You should too. Think of it this way: The more experience you have – the more lumps you’ve taken and hard knocks you’ve received and mistakes you’ve made – the more “educated” your “gut.” While you should never go on intuition alone, if you have a funny feeling about a candidate… see that as a sign you need to look more closely.

And look more closely.

For a detailed insider’s peek into how we think about culture at HubSpot, check out our Culture Code slides (embedded below for your convenience).

Bottom line: Define the intangibles you want in your employees and never compromise by hiring a candidate who lacks those qualities.

5. You decide to double down

There are two basic kinds of risk you can take on a potential employee.

First the worthwhile risks: Taking a shot on a candidate you feel has more potential than her previous employer let her show; taking a shot on a candidate who is missing a few skills but has attitude in abundance; taking a chance on a candidate you feel certain brings the enthusiasm, drive, and spirit your team desperately needs. Those are good chances to take.

Now the foolish risks: Taking a shot on a candidate with a history of performance issues that you hope will somehow develop a strong work ethic; taking a chance on the candidate who left his last two jobs because "my bosses were jerks;" taking a shot on the candidate who has no experience yet only wants to talk about how quickly and often she will be promoted.

Why do you rationalize taking foolish risks? You're desperate. Or you're lazy. Or you have "other issues to focus on." Or you figure your culture is strong enough to withstand the impact of one ill-fitting employee.

Don't take foolish risks. They almost always turn out badly. Occasionally take potentially worthwhile risks, because they can turn out to be your most inspired hires and, eventually, your best employees.

And never, ever take a chance that creates high-interest culture debt.

The cost to your organization is just too high. And, life is short.

A variation of this article was also posted as part of my participation in the LinkedIn Influencers program. 

The WhatsApp Effect: Don’t Base Your Acquisition Strategy on Outliers

“There may be no greater testament to the viral nature of WhatsApp than the fact that the company has accomplished all this without investing a penny in marketing. Unlike their smaller competitors, it hasn’t spent anything on user acquisition. The company doesn’t even employ a marketer or PR person.” – http://www.businessinsider.com/facebook-is-buying-whatsapp-2014-2

“We haven’t done any paid marketing!”

There’s that statement again. Every time I hear someone say this, especially when they’re a founder trying to raise money, I cringe. Yes, there are those rare products that grow like wildfire without spending a dime, but those are few and far between. For most startups, paid marketing and distribution are critical to success. If you’re boasting about the fact that you haven’t spent anything on marketing or distribution, that tells me you’re completely neglecting the biggest user acquisition channels – adwords, SEO, Facebook mobile installs, etc. Basically, you’re telling me that you don’t have the expertise or foresight necessary to acquire users via paid channels. Not good.

Putting a company like WhatsApp on a “no marketing” pedestal sets a bad example for other companies. Based on what people are saying about WhatsApp’s amazing growth, you’d think not understanding how to acquire users profitably with paid marketing was a good thing. This couldn’t be further from the truth. For the 99% of companies out there are at *not* WhatsApp, paid marketing is a crucial tool for growth.

Here are some reasons I’ve heard why startups don’t focus on paid distribution:

We don’t have product market fit.

We’re focused on improving our product.

We don’t have a marketing budget.

We don’t have the expertise.

We don’t have time.

The last one is definitely the worst, but all of those excuses are pretty bad. There’s only one valid reason to neglect distribution, and that’s if you don’t have analytics/tracking properly installed. However, this can be solved by simply adding a pixel to your page! Here’s why the other reasons are BS, too:

We don’t have product market fit. If you don’t have product market fit, you probably don’t have a lot of people using your product. And for the people who do use your product, you’re probably losing them quickly. With paid ads, you can test different value propositions and messaging. Most importantly, you can get to product market fit much faster because you’re bringing in new people all the time and testing your assumptions.

We’re focused on improving our product. If testing your product with actual customers is not part of your improvement process, something is very wrong.

We don’t have marketing budget. Do you have $5/day to spend? If not, you might have bigger problems. The point is that even a very small budget is enough to get started. The fact that you’re collecting data and learning to use the different ad platforms is hugely valuable. Keep in mind there are also plenty of retention tricks you can do for nearly $0, such as funnel abandonment emails.

We don’t have the expertise. The only way to learn is to get started. You can read about distribution, watch videos on distribution, but the best way to learn distribution is by getting your hands dirty and trying it out.

We don’t have time. Yes, you do. Getting more traction for your product should be priority number 1.

You’re probably not WhatsApp, so your app probably won’t grow to 350 million daily active users without any marketing. Get started with paid distribution today and TEST, TEST, TEST.

If you enjoyed this post, first check out these additional resources for how you can up your game from the 500 Distribution team:

Then, sign up to get a daily bite-sized distro hack (and one awesome GIF) delivered to your inbox:

>> Subscribe to Distrosnack here <<

Matt helps 500's portfolio companies understand their analytics and get more people to their product by any means necessary. His best strategy so far has been carrier pigeons. When not helping startups, Matt can be found running after his dog on the beach while she chases birds (carrier pigeon recruitment?).

Want to Punch Up Your Presentation With Visuals? Here are 5 Ways.

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AppId is over the quota

Few things in this world are more boring than sitting through a bad presentation.

While a big portion of a presentation’s quality is up to the presenter, the quality of the visuals augmenting the presentation play a bigger role than most people think.

The key to building a good presentation is to know and remember the purpose of each of its components. Ideally, the visuals in a presentation should complement what the speaker is talking about. This means that what the speaker says is the main focus, while the visuals provide something relevant to look at as a background.

Here are five ways to make sure your visuals help your presentation instead of hurting it.

1. Speak your words -- don’t write them on your slides. Too many presenters add large blocks of text to their slides, thinking this helps enhance their presentation with detailed information. Not true. Text -- even bullet points -- distracts your audience from listening. The human brain has a lot of difficulty listening to speech and reading something different at the same time. And reading exactly what is on your slide is just going to bore your audience. People read much faster than a comfortable presentation pace, so they’ll be done with the slide before you finish.

Related: 8 Pro Secrets to Delivering a Knockout Business Presentation

Jonathon Colman definitely knows this, and his slides in “Why Our Content Sucks” expertly incorporate supplementary visuals.

2. Use beautiful images to supplement your content. Beautiful images help people to remember what you are talking about at the time. You can add to the memorability of your presentation by having compelling images that go along with what you are currently talking about.

This presentation on Digital Citizenship by Alec Couros does an great job of using attractive images to supplement the content the speaker is covering.

3. Make your diagrams interesting - but not self-explanatory. Diagrams are a great way to help explain complicated concepts but make sure that you actually address the diagram in an interesting way. Diagrams for a presentation are different from diagrams in standalone content. If the diagram is self-explanatory, it probably gives away too much info (just like reading the text on a slide). 

Related: As Social Media Becomes More Visual, a Tool for Analyzing Image Engagement

“Conquest of the American West” by Tom Richey effectively uses diagrammatic maps to help explain several concepts about manifest destiny and the politics of moving America westward.

4. Use data visualizations to clarify information - not repeat it. Data visualization is the best way to present data. As Hans Rosling proved, well designed data visualizations can help augment a great presentation and create something truly engaging. As with diagrams, talk about the visualization in a way that helps to clarify and complement. Discuss the visualization on a conceptual level and add context. Don’t just repeat what the visual is already showing.

5. Balance what you say with what your presentation delivers. Above all, remember the visuals aren’t the whole presentation. When you’re building your presentation, don’t dump all of the knowledge into the visuals. If you do that, then there’s nothing left to present. The best presentations out there won’t make 100% sense unless you see the presenter deliver the presentation. Many of the slides you’ll see online only give you a general idea of what was being discussed, not of the details, or even the main point. Dan Gilbert balances visuals and actual presentation very well in “The Surprising Science of Happiness“, with just enough visuals to augment his charismatic presentation, but not so many to draw attention away from the message he is making.

Building a great set of visuals for your presentation is just the first step. There’s still no substitute for practice, but a great presentation requires all of these ingredients.

Related: The Top Visual Design Trends for 2014 (Infographic)

Drew Skau is visualization architect at Visual.ly and a PhD computer science visualization student at UNCC with an undergraduate degree in architecture. 

This story originally appeared on Visual.ly

Want Your Business to Be a Success? Set Your Employees Up to Succeed.

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AppId is over the quota

For employees to excel, be productive and passionate in the workplace, there needs to be an ongoing focus on fostering an environment where they feel valued and a part of the corporate culture. Trust me I know.

Working with organizations of all shapes and sizes -- from Fortune 100 companies to small startups – I have learned that placing an emphasis on developing a strong culture and an environment fueled by employee successes are two cornerstones of any high-performance organization.

When companies only utilize a top-down approach, it shows. Employees lack motivation, performance suffers and there is an aura of negativity. On the flip side, a successful corporate culture is defined by employees and carried through by their experiences and contributions. Companies that focus on cultivating unique cultures with input from within, use this as a key differentiator when it comes to recruiting and retaining top talent. But how do you employ that sort of work environment?

Related: 3 Companies Share How They Stay True to Company Culture Amidst Rapid Growth

The Harvard Business Review notes six components of a great corporate culture: vision, values, practices, people, narrative and place. If implemented correctly, a company could see a boost between 20 and 30 percent in performance levels, compared to cultures deemed “unremarkable,” according to author Professor James L. Heskett, the author of The Culture Cycle.

As a corporate coach, I believe the first four have the most critical impact on individual and organizational success.

Here are a few pieces of insight, along with advice for implementation.

Vision. Effective leaders talk about the importance of having a vision, but it’s hard to focus on a vision when you’re in the trenches and trying to keep up with the daily grind.

I remind the business owners and execs I work with that focusing solely on the day-to-day details will not help grow their company to the next level. To get them moving in the right direction, we work on setting aside specific increments of time each month to devote to vision and integrating the vision into interactions with employees.

As an entrepreneur (or executive), consider including a vision topic at staff meetings to reinforce the behavior changes you want to see and to keep the vision alive. Ask employees questions about how they can support it, as well as one or two key things they will do differently that week to focus on their own goals and how those relate to achieving the company’s overall mission.

Values. Principles help shape every workplace and provide a set of rules for behavior, attitudes and culture. They let employees know where the stand, how they fit within the organization and how their efforts will be recognized. Most importantly, values build loyalty and trust -- two things that are especially important in smaller companies. When people share the same values around work ethic, integrity and general conduct, there tends to be a direct correlation to performance and job satisfaction. I encourage leaders to establish their corporate values by defining key behaviors annually and monitoring at quarterly check-ins.

Related: Creating and Keeping a Positive Company Culture

Practices. We all know the old saying, “You are what you eat.” Translate that into organizations and it becomes, “You are what you practice.”  If a company doesn’t have sound and consistent business practices, this will be revealed by employees in a less than positive light.  Business practices show up everywhere -- from how internal meetings are run to customer protocol and the very essence of your brand.

Establishing solid practices from the get-go and constantly honing these practices with feedback and buy-in from your employees will ensure that the entire organization works more comfortably, effectively and efficiently.

People. Your employees are your most valuable asset, period. And in entrepreneurial environments with fewer employees, additions or replacements have a much larger effect on the overall team dynamics and the culture of the organization.

My number-one suggestion: Start with the right people and then get to know them over and over again. Do you know what motivates every individual on your team? Do they feel challenged? Are they happy in their current role? Understand each of your employees’ goals and aspirations and help them develop a plan to achieve those goals. Lastly, recognize your people for their achievements. A simple thank you or compensation lets them know that their contributions are appreciated and sets them up for future successes within your organization.

When leaders place value on growing people’s individual talents and developing a culture from within, we not only see personal success but success for the organization as a whole. Leveraging the power of your employees’ strengths will increase their productivity, reduce turnover, promote a stronger corporate culture and help propel your business to the next level.

Related: Making Gratitude Part of Your Company Culture

Mary Kaiser is the founder of Start with Strengths, a professional consulting and coaching firm.  As a corporate coach, Mary has worked across all levels of executive leadership with companies of all sizes. Her experience includes more than 25 years of growing leaders, developing teams and improving corporate cultures of businesses across the country.  

How The Business of Software Conference Changed My Life

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AppId is over the quota

tl;dr:  If you work in the business of software the one must-attend event is the Business of Software (Boston, Oct 28th  –  30th 2013)

Note from Dharmesh:  This is a guest post from Patrick Foley.  I normally don't post articles that promote an event — but Business of Software is not a normal event.  It's the ONLY conference that I've spoken at 5 years in a row (an am speaking again this year).  It's the only conference for which I stay at a hotel in Boston (5 miles from where I live) just so I can hang out with the people attending the conference as much as possible.  It's that good. You should attend.  (Note: I am not affiliated with the organizers, my selfish reason for convincing you to go is so I can meet more awesome people).

ABSTRACT: If you’re not satisfied with some aspect of your career, go to a great conference like Business of Software. The best conferences can dramatically alter your perspective and ultimately change you.

Four years ago, I attended my first Business of Software conference. Back then, I was a technical evangelist for Microsoft, and since my customers were other software companies, I thought I knew all I needed to know about this “business of software.”

Obviously, I was wrong. For three days I listened to amazing speakers like Jason Cohen (founder, WPEngine) explain how the different personal goals of founders have an enormous impact on their business actions – meaning you should pay more attention to advice from founders with similar personal goals. I was inspired to hear Peldi Guillizoni (founder, Balsamiq) explain how he built his business – and how his journey actually started while working for a big company (hey, just like me!). I was shocked to hear Joel Spolsky’s very intimate description of how funding really works. I learned measurement concepts from Dharmesh Shah (founder, HubSpot) that I didn’t even know were knowable. I was genuinely moved by the stories from these founders and all the other brilliant speakers. And that was just the first year for me (more great speaker videos from 2010, 2011 and 2012).

At a great conference, the attendees are as important as the speakers. Many of the people I’ve met at Business of Software have become my friends and advisors. One became my cofounder in my first effort at a building a software company (a story for another day). There’s a bond that develops among Business of Software attendees that’s hard to describe. Part of it is that the speakers are highly engaged attendees themselves – something you don’t see often – this is their community, their tribe, and the speakers clearly look forward to being a part of the event from both sides of the stage.

There was something about attending that conference in person that shook me to my core and sparked a passion for learning how software companies really work and what makes them successful (spoiler alert: it’s freaking hard). Yes, I already worked for one, but Microsoft is HUGE – I was a deckhand on a battleship. Although I was working with other software companies, I was ultimately selling to them … you don’t learn how things really work in that situation. I even had a podcast that allowed me to speak with some brilliant founders … but it took being in a room with all these people at once to change me. BoS changed me. (I wrote about that special year and even have a manic podcast episode describing it.)

Great conferences like Business of Software aren’t cheap, but they’re a great investment. Microsoft paid my way to a couple of conferences a year – that’s a HUGE perk of working for an established company! If you work for a company that has multiple layers of management, then they probably have a conference budget already. Use it! I attended Business of Software on Microsoft’s dime in 2010 and 2011. Last year, I took vacation time and paid my own way, because I was preparing to leave my job.

This year took me in another direction. When it became clear that my product company wasn’t going to work, it was still time to leave Microsoft, so I reluctantly returned to consulting. I was a consultant for 14 years before joining Microsoft, and I’m pretty good at it – but I still felt defeated. Sometimes you just gotta lick your wounds, recover, and figure out a new path. I figured I’d build up my financial resources for a few years as a consultant and then try again to build a software company.

But then a crazy thing happened … a few weeks ago, a couple of friends that I met at Business of Software contacted me about a job. They have a small, very successful software company, and they think I could help with their next stage of growth. WOW! I didn’t see that coming. I’ll have my hands in all parts of the business, improving anything I can and learning everything I can. It’s not a startup (they’ve already found product/market fit), but it’s actually a better fit for me at this point in my life, because it provides greater financial stability, and it will allow me to experience how a successful company operates. A while back, I asked Jason Cohen for life/career advice, and this was exactly the sort of situation he said I should be looking for. It’s PERFECT.

I’m sure you can guess the call-to-action of this post by now … sign up for Business of Software and GO. It just might change your life. The best work I did for Microsoft stemmed from Business of Software. Then it inspired me to leave Microsoft and pursue work that I like even better. And now my dream job FOUND ME because I went to Business of Software.

My new company and I haven’t actually finalized my role or my start date yet … we’re going to formalize things in 2 weeks at Business of Software … I hope to see you there! It’s going to sell out, so you need to jump online and order your ticket now. My understanding is that it’s going to be several hundred dollars more expensive next week (if you can get in at all). If you’re on the fence about going, feel free to contact me (pf@patrickfoley.com) to talk about it.

To Be or Not to Be a Franchisee: 3 Key Questions to Consider

The dream of owning your own business is alive and well for most Americans. The only problem is that many people don’t know where to start on the journey to becoming self-sufficient. There are a million different options, but first and foremost each potential entrepreneur must decide if he or she wants to become a franchisee or start a business independently.

Each route has its benefits; therefore it’s critical to take the time to consider both options before making a decision. What it initially comes down to is asking yourself the following questions:

1. Do you understand every aspect of the business or do you thrive in one area?

When starting a business from scratch, entrepreneurs should be well versed in every single element of the enterprise. They need to create systems and procedures and test whether these work for that particular business. This process of ironing out the details deters some from choosing to own an independent business but excites and challenges others.

Conversely someone who buys a franchise knows that someone else has already done the “dirty work” and found the most effective systems for that particular business. A franchisee must simply thrive at correctly running the system while adding their own personal management touch.  

2. Are you an expert at making a name for yourself or would you like to be associated with an already strong brand?

When purchasing a franchise, you are also inheriting the reputation of that brand. For example, if you open your own Dunkin’ Donuts shop, you will encounter customers who already recognize the pink and orange logo. Many people will know whether they like the brand and will expect speedy service providing them doughnuts and steaming hot coffee.

On the other hand, those starting a business from scratch have a chance to create a unique brand identity. But consumer trust and awareness don't come easily; they need to be earned through time, consistency and excellence.

3. Are you the kind of person who likes to go it alone or do you appreciate a sense of community?

Owning a business -- whether it's a franchise or not -- can be risky. Some people prefer to be self-reliant and want to manage potential problems using past experiences and premonitions as guides. An entrepreneur must solve the issues that arise.

Others prefer enlisting the support and help of others to ensure that their business runs smoothly. A franchisee has many built-in allies, including the franchisor and other franchisees within the system.

The most important factor fo success is making sure that problems are identified and steps are taken in the right direction.

7 Ways to Know Your Startup Is Ready for PR

The following post was contributed by Leta Soza, PR Engineer at AirPR. Follow her @LetaSoza.

You have a big launch coming up, and you couldn’t be more excited to share your news with the world! Before you start pitching senior reporters or enlisting the help of an agency to do so, ask yourself: Are you really ready to fulfill your end of the bargain?

Holding a quick audit of your PR tool belt will help ensure that you’re equipped with everything you need to build your narrative and supply journalists with the glue that’ll keep ‘em coming back for more. Remember, how you lay this foundation of initial outreach will affect your company’s lifelong relationship with press.

Read through this checklist to see if you’re ready to show off what you’ve been building.

You’ve established a narrative and built key messaging. Have you invested time and effort in building a narrative, fine-tuning brand messaging, and outlining key talking points? What anecdotes will you turn to when you’re asked for a quote on the fly? How will you position your brand among industry trends, and what makes you stand out from competitors? Without concrete, established messaging, you’re essentially throwing your strategy to the wind.. Remember — PR is an investment, so take the time to do it right like you would any other area of your business. Take the time to really think about your positioning before your big PR push.You’ve got enough money in the bank for a proper, comprehensive PR budget. If snacks and desks seem like distant dreams, you should probably invest your time and money in other parts of your business. A solid PR budget for a startup will run between $3-7k/month depending on the PR pro or firm you hire. Also, be sure to temper your expectations. Just because you turn on the PR hose doesn’t mean big coverage will start tomorrow. It can take up to 2 months to start to see media hits so plan product launches accordingly. Give yourself enough time to formulate a comprehensive strategy.You’ve designated a point person to manage outsourced PR. Whether it’s your social media/content lead or another person on your team, you need to have someone on staff who will take ownership of outsourced PR to ensure timeliness and transparency. Quality storytelling can make or break a company, so be sure your intermediary is able to guide your brand’s narrative and understands the needs of your companyYour spokesperson has been coached and is ready to rock. You can’t “do PR” without a great spokesperson, and it’s essential that this person feels confident in their delivery. Their job: deliver key messages and shine a flattering light on the company while remaining authentic. This person should be a founder or someone else who is able to articulate what makes your company different. Abve all, make sure this person is media trained, prepped for interviews, and ready to shine.You can prove how you’re different. Does your product have any unique bells or whistles that can show rather than tell? What anecdotes can you share with reporters that support the claims you’re making? Think about every customer touch point as a piece to the active-PR puzzle. From a memorable 404 page to an example of how your team made a customer’s lifelong dream come true, having solid examples to show why you’re different will solidify whether you’re newsworthy or not.You’re ready to tout exclusivity. Every reporter likes to feel like they’re getting something special. Are you okay with saving the news for a one-and-only or small group of reporters? Just make sure it’s something worth their time and be respectful by starting conversations early in the game.You know that PR is a team effort, and that every employee is a brand advocate. Sure — most employees will not be speaking to the media, but embracing the fact that they all deliver messaging via their respective channels is paramount to building a cohesive narrative. From your social media team to your customer care specialists, all employees should be on the same page when it comes to overarching messaging. Everyone should know where to funnel media inquiries. It’s not a bad idea to add PR 101 to on-boarding orientations or hold an all-hands meeting on the topic.

Now that you know what should precede heavy PR outreach, map out a timeline for achieving these foundational steps Happy pitching!

Resident marketing manager and baker at 500 Startups.

Weighing a Rollout of Benefits for Employees? 4 Tips for Startups to Consider

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AppId is over the quota

Should a startup company offer employees benefits? That question cuts to the core of any entrepreneur's most significant challenges: cash burn, talent recruitment and company values.

But founders of startups might find it wise to consider offering employees certain benefits to help build the company’s culture. Here’s why:

Benefits are more valuable to employees than you think. MetLife’s annual study of employee benefits trends found that benefits can be even more important than advancement opportunities and company culture in fostering employee loyalty. That’s important for founders of startups to know, considering the fact that recruiting takes a massive investment of time.

Related: Does Your Job Satisfy You? (Infographic)

And benefits may not be as expensive as you think. Okay, free Friday massages might be. But health insurance is certainly more affordable for small businesses now than it’s been in recent years, due to new offerings under the Affordable Care Act. 

And by offering benefits, you company can stand out from the pack. Only 28 percent of businesses with fewer than 10 employees offer health insurance. If you can afford it, then your company will have a recruiting edge. 

If you’re convinced that you should provide your employees benefits, here’s what you should do:

1. Start with the basics. You want a healthy team that won’t get financially rocked by a trip to the emergency room. That means you should provide health insurance and disability insurance.

Retirement contributions, gym memberships, catered lunches and the like should all wait until your business becomes financially stable. Also, they don’t deliver as much bang (in terms of employee satisfaction) for the employer's buck as good health-care coverage. 

Arrange for a solid but not extravagant group health-insurance plan to keep costs in check. Many employess at startups are relatively young and healthy. For them, a bronze- or silver-level plan is appropriate. (Usually, premiums will run $200 to $300 per employee per month). Find a plan that makes people stick to a network (an HMO or EPO), which will keep your costs down.    

Disability insurance is also an important but often overlooked offering. This type of coverage pays a cash benefit if an employee is unable to work as a result of  injury or illness. If you can afford to pay 0.5 percent to 1 percent in compensation per employee, then you can offer short-term and long-term disability insurance. 

Related: 7 Things to Consider Before Buying Disability Insurance

2. Manage expectations. Consider what you can afford to spend on benefits for each new hire. Build it into your baseline hiring costs and don’t change this figure unless you’re improving it.

Avoid a reduction in benefits. Nothing will have your employees grumbling faster than that. (This is because of a human behavioral quirk called the endowment effect.) It’s better to start out conservatively with your benefits offerings and improve them over time as your budget can absorb them.

For reference, small companies that provide health insurance to employees contribute on average per employee $857 per year for individual coverage and $3,346 per year for family coverage. Contribute only what you can afford. And remember that only 28 percent of small companies offer health insurance at all. Contributing even a small amount for employee health insurance places you well ahead of the pack.  

3. Take advantage of health-insurance subsidies. The Affordable Care Act offers subsidies (as much as 50 percent of the cost) to small businesses that provide health insurance to employees. To qualify, the business must have fewer than 25 full-time employees, pay on average annual wages below $50,000 and contribute 50 percent or more toward premiums. 

For startups not eligible for the subsidy, taking advantage of individual health insurance is also an option. Individual health insurance costs about the same per person as small-group health insurance. So, a startup could have employees buy their own individual health-insurance plan on the relevant state marketplace and reimburse them for premiums. 

4. Get a broker. Founders don’t have time to deal with the complex world of insurance benefits. Let a broker handle it for you. Best of all, there’s no extra cost. Brokers are compensated by insurance companies through commissions, which have already been built into insurance prices. They’ll run quotes, give you guidance and manage the paperwork for you.

Business owners can figure out what they want and what they're comfortable spending and let a broker manage the rest.  

Related: How to Create a Company Culture That People Will Be Excited to Join

Jennifer Fitzgerald is the CEO and co-founder of PolicyGenius, a startup that provides online education and shopping for consumer insurance. Previously, she was a consultant at McKinsey & Co., advising Fortune 100 financial services companies.

Why 'Don't Take It Personally' Is BS

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AppId is over the quota

If you are an entrepreneur who has launched a startup, you know the feeling of pouring your heart and soul into a business. At some point along the way, it’s possible that you’ve also been told that you shouldn’t take your business matters personally -- after all, “it’s just business.” Easier said than done.

Often, founders have a difficult time finding a balance between focusing on the x's and o's of building a business while still letting their passion and emotional investment guide them.

As an entrepreneur and business executive for more than 20 years, I’ve learned a lot of things. One is that the startup phase of a business is defined by highs and lows that may seem like life and death decisions at the time. Many of these will turn out to seem trivial with the benefit of even a few years’ hindsight. When I look back at the start of my career and my company, there are a few key tips that led me to find a business strategy that was motivated -- but not controlled -- by my personal and emotionally-driven will to succeed.

Related: How Young Entrepreneurs Can Rein in Their 'Toxic' Emotions

For entrepreneurs, business IS personal so lean into it. We are all human, and we have emotional responses to things we are passionate about.  When we close a huge deal, we get excited. When we lose to the competition, we get angry or discouraged. Don’t waste time and energy trying to shut off the emotional side of your brain -- it’s just not going to happen. Embrace the emotions and use them to gain ground.

Take into account your feelings, but don’t let them cloud your judgment. Early in our company’s history, my co-founder Phil Shawe and I agreed to a multimillion-dollar project for a major retailer. Excitement for the deal was through the roof, so we ramped up our staffing, laid out our plans and invested heavily to be able to deliver. However, in all of our anticipation of signing the deal, we hadn’t included any language in the agreement to protect ourselves should the scope be reduced or the contract cancelled. When the retailer decided to drop out, we were left with a major financial blow and equally bruised egos.  

Point of the story: Show your feelings but remain aware. As an entrepreneur you need to always be on your toes – especially during the high and low points. You don't want to make costly errors, when you are on your emotional rollercoaster.

Related: Get Angry! Be Passionate! Your Emotions Are Vital to Success.

Learn from your losses. Losing that deal was hard to swallow, both financially and emotionally. We mourned our failures and had a difficult time recognizing that some good could actually come of this – it would prove to be a valuable learning experience. Today, we would never agree to that type of deal or make such a significant investment without considering any and all possible circumstances and taking every possible precaution. Looking back, this early mistake ultimately made us a stronger, more experienced, and more aware company.

For entrepreneurs just starting out, remember not to sweep your losses under the rug without reflecting on what went wrong and how to ensure it won't happen again.

Dissect your victories. Everyone likes to win (and to celebrate) but taking the time to understand the “why” behind the wins helps founders to be best positioned to replicate that success again. As we’ve scaled our business around the world, emulating some of our past strategies for success has helped shape our growth.

Let your emotions drive you toward your goals. Balancing your emotions is critical to succeeding as an entrepreneur. Your emotions should not define your business or you as an executive, but they should not be written off entirely. Without the desire for success -- a powerful emotion in its own right -- you likely wouldn’t have started a company in the first place. Your business is an extension of your goals and aspirations, and it will always be personal. Let your emotions help shape your ambitions and strategies – maybe they motivate you to reach a new benchmark, push you to expand your customer base or inspire you to release a new version of your product. Just remember the importance of finding that balance between a level head and a passionate heart. As long as you set your emotions into action along that middle ground, you will be on the right track. 

Related: Why Reputation Management Is Critical to Your Personal Brand

Liz Elting is the co-founder and co-CEO of TransPerfect, a privately-owned business focused on providing language and business services with more than $400 million in revenues. Elting oversees the day-to-day operations of the company, headquartered in New York City.

The Why and How Of Updating Your Angel Investors

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AppId is over the quota

There’s a massive amount available on the interwebs on how to improve the odds for success in new ventures. But almost nothing concrete is available on the care and feeding of your investors. You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your investors updated, excited and engaged.

The reason is:  The CEO is the investor's  user interface into the business.  It's how investors see what's going on, and in some minimal ways, interact with the business.

We polled several early stage investors (including ourselves) that have 30+ investments each under their belts, and asked them their advice for entrepreneurs on how best to communicate with them and update them on the business. Here are the results.

1) Write your investors consistently. probably every 1-2 months (if you're early stage), and every 2-3 months if you're a bit further along. If you have a regular advisory board or board of directors meetings, that's a good time to send out an update. This is preferable to phone calls, both for you and for them. If you’re smart, you’ll send this letter out, in more or less similar form, not only to your investors but also to mentors, advisors and staff. And if you do ever follow up with calls, they’ll be up to speed and more productive.

2) Keep it short. 2 pages, max. Your investors want to know what’s going on, but they don’t need to hear every detail.

3) Use a template. We like the TechStars one. Katie Rae and Reed Sturtevant of TechStars Boston teach their companies to communicate with mentors in a way such that each letter builds on the previous one. Typically, the letter gives both highlights and low-lights since the previous communication, sets some short term goals, and then reviews the progress—or lack thereof—on the goals set earlier. Just knowing that you will be producing a report card helps focus you on the important stuff and ensures that things don’t get forgotten. Check out the investor update template for a sample.

4) Remind them what you're doing (now).  I know this is going to sound strange, but often your investors are not doing as good a job as they could keeping up with all your activities, news, tweets and pivots.  Always include a one sentence description of what you're doing (now) just as a friendly reminder.  A side benefit to this is that it forces you to write (and read) your one sentence description.  This is one of the hardest tasks in startup-land.

5) Tell them the one or two strategic problems you are wrestling with. Got a few hard decisions? You’d be surprised how quickly an investor will respond. And odds are pretty good that they’ve seen this movie before and can help you come to a better decision. If it’s personnel-related, though, you may wish to be more circumspect.

6) Keep it honest, but don’t tell your secrets. Would you be comfortable if this email ended up in public, or in the hands of your competitors? If not, consider editing it down.

7) Always have 1-3 direct asks. Looking for some specific introductions? Ask. Need to source some key personnel? Ask. Want them to share some important news on their social media networks?  Don’t be proud, don’t be shy, just ask. 90% of the time, the investor will probably not be able to help, but in the 10% of the time they can help, it's often pure gold.

8) Cast a wide net, but bcc. The more people you can keep up on your company, the more likely it is someone will be able to help you out, and the more you can leverage your network. But respect your investors’ privacy, and make sure you are not revealing any confidences in the letter. (I still screw this up—when in doubt, leave it out.) One idea would be to setup a simple mailing list so you're not trying to type in email addresses manually every time.

9) ARCHIVE all correspondence in a shared folder. Your investors will be grateful that they don’t have to be organized. This tip is so simple, yet almost no one does this. Your investors have more on their plate than just you. Make it easy on them by putting everything they need to see into one folder which they can reference. Send each letter by email (don’t make them have to hit links or print out attachments,) but include a link to the shared folder with the full archive. Inside, have all of your historic correspondence, and perhaps even your latest pitch deck, any financials you want them to see, etc. You might consider having two separate folders—one complete one, for the inner circle, and one that’s been redacted down for the broader crowd.

Startups fail for lots of reasons— but one of the most common one is that they run out of money. Informed investors are generally happier investors—and at a minimum more capable of helping. And, if you're out raising another round sometime, chances are, your angel investors are the one's that can help make intros. It's easier for them to do that if they hear from you more often than once every 12-18 months when you need some paperwork signed.

Remember, this exercise is as much for you as it is for them.  

This entire process should take you less than an hour or two a month and it's worth it. Besides, if you do it right, you'll actually find that it helps you to write these updates -- and it's not a complete waste of time.  

This article was a collaboration between Ty Danco and Dharmesh Shah. Ty is CEO/co-founder of BuysideFX and an angel investor/mentor (you should be reading his blog). Dharmesh is founder/CTO of HubSpot, runs OnStartups.com and is an angel investor in over 40 companies (you can follow him on twitter @dharmesh).

The Growth Hacker's Dilemma: Process vs. Tactics

After conducting nearly 100 interviews with some of the world’s best growth hackers on Growth Hacker TV, I have become keenly aware of a certain tension that is in the growth hacking ecosystem. Some growth hackers choose to emphasize the process of growth hacking while others choose to see growth hacking as a set of tactics that can be applied to various scenarios.

First, let me define the growth hacker’s process. There is no one single agreed upon order of operations, but a growth hacker’s process is based loosely on the scientific method. If you can remember high school, the scientific method is basically the following:

Question - Why do visitors leave our registration flow after the first page?

Hypothesis - They might be leaving because page two has too many form fields present and this scares them away.

Prediction - If we have more registration pages, but less form fields on each page, then our completed registrations will increase in statistically significant ways that could not be the product of chance.

Testing - For the first 2 weeks of September we will run an A/B test, showing 50% of new visitors our current registration flow, and showing the other 50% our new registration flow which increases the number pages but decreases the fields per page.

Analysis - The results show that our new registration flow had 27% more completions than our current registration flow, and this is statistically significant enough to conclude that we should implement our new registration flow.

Here is where things get interesting. Some startups will actually use this scientific method (or something similar) as a means of gaining insights about their product, thereby enabling them to make progress. Others, however, will not have a rigorous process like that listed above, but they will instead use the results of other people’s experiments. Put another way, some startups have a process, other startups just implement the tactics (best practices) that are the results of someone else’s process. If someone read about the above experiment on Quora then they might adapt their registration flow without a scientific process in place to support such a move.

The question is, which kind of startup should be applauded and which should be reprimanded? It might seem obvious to celebrate the rigors of the scientific method and side with any startup that uses such a process. However, I think there is a case to be made for both kinds of companies. Obviously, if someone doesn’t run the experiments then we will never arrive at the tactics in the first place. The tactics are the byproduct of someone’s hard work and that should be appreciated, but think about how the scientific community actually operates. The scientific method is a tool that serves the entire scientific community, and the results of that tool are often fair game for the community. Scientists don’t expect each other to run every relevant experiment for their personal endeavors. Newton said, “If I have seen further it is by standing on the shoulders of giants.” Why can’t a startup simply use the results, as discovered by their fellow entrepreneurs in lab coats, as a benefit of the community?

The truth is, there are pros to both ways of thinking, which I’ll list below, but I don’t want us to view growth hacking as only a process or only a set of tactics and simultaneously miss the community aspect of our enterprise. Here is how I see things:

Pros of Process Oriented Startups

Without process oriented startups we would have no tactics.

They are able to find new growth hacks when old ones cease to work.

By understanding the process, their implementation of any given tactic will be more nuanced and effective.

They are more self sustaining, able to use the community, but not be entirely dependent on it.

Pros of Tactic Oriented Thinking

Allows smaller startups, with less funding, to implement tactics very cheaply.

It is an entry point into growth hacking which is more accessible than experimentation, even though it might lead to experimentation later on.

Not every experiment needs to be ran by everyone. Some best practices are near universal and can just be applied. We all do this to some degree whether we realize it or not.

So, what is the answer to the dilemma? Is growth hacking a process or a set of tactics? Well, both, and here is what that means practically. If you are in an organization that has a growth hacking process in place then see yourself as a part of a larger community. We are grateful for your work, but you don’t need to be pompous about your place in the universe. Share what you find, grow our collective knowledge base, and understand that not every company will imitate you, and that’s ok. If you are in a non-process oriented startup that is still trying to use growth hacking principles then be extremely appreciative of the companies that are supplying these best practices, and consider creating your own process so that you can give back to the community as much as you take from it.

Startups aren’t going anywhere, and growth hacking is here to stay as a robust methodology for growing them. Whether you are in the lab, or reading the research paper that was spawned from someone else’s lab, understand that this is a community, not a zero sum game.