Category: My entrepreneurial adventures

How Telling a Story Makes Start-Up Pitches Successful

This article ‘I Boiled Down Hundreds of Successful VC Pitches to One Winning Formula‘ provides some advice as to how to build start-up pitches for them to be successful in funding.

“My answer is always the same: tell a story. Humans have responded to storytelling for all our evolutionary history — we’ve been passing down oral history and painting tales on cave walls for literally thousands of years. When you want to nail your pitch deck, the best way is to lean on that common love of stories we all have — and the fact that stories are far more memorable than facts, figures, data, numbers, bits and bytes.”

According to the author, this includes a vision of where the company will be when successful, how to resolves the pain of the future customer, how your product will slain the villain pain, and how the world will be better ever after.

From my experience it is certainly an excellent advice because it will create an emotional connection with the audience, even more so if it can relate to the story somehow; and we are all longing for a story where everything ends well.

For successful pitches, try to tell a compelling story providing at the same time a comforting vision of a bright future.

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How the Next Big Idea Doesn’t Need to Be Original or in a New Market

I love this blog post by Seth Godin ‘The next big idea‘ that reminds us that it does not need to be new not have no competition.

“There are two confusions. The first is that the next big idea must be fully original. The second is that it have no competition. This is almost never the case.”

It is true that many thriving enterprises have just reinvented a small part of a business model, or have built on existing industrial practices just changing one parameter. At the end of the day it depends on the client: “The future of all of these types of organizations isn’t based on a lack of customer choice. It’s based on customer traction.”

Seth Goding reminds us that “The hard part is showing up to lead.”, leading through to get perfect execution in the market that is being addressed.

Looking for an idea to create your company? Don’t necessarily look for original or to create a new market: that’s often too hard. Just execute better than others and get customers to love what you are doing.

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How To Develop the Skills of Successful Strategic Advisors

This article by Valeria Maltoni ‘The 12 Qualities of Extremely Valuable, Highly Paid Strategists’ provides an interesting insight into the skills of strategic advisors.

The skills she mentions are the following:

  • Know which problem the insight can solve
  • Have a broad and expanding scope of knowledge
  • Understand the psychology of leaders
  • Respect high-value experts
  • Improve the person, not just the project
  • Be fluent with language
  • Be adept with varied tools and techniques
  • Understand the power of words
  • Know how to write and present
  • Preserve the expert’s voice
  • Work fast
  • Work well

I find this list quite interesting, and in particular the statement “improve the person, not just the project”. It is something I have always felt, taking a coaching certification to enable this work on the client as a person in addition to working on harder stuff.

Certain skills make a huge difference when advising on strategy. And they are not about being better at strategy! A lot deals with interpersonal skills and asking the right questions.

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How Third Workplaces Become a Trend

‘Third Workplaces’ are alternative working environments, close to home but within a dedicated working space, co-working with other people. According to this article ‘The rise of “third workplaces”‘, they are clearly on the rise. “People aren’t working from the office, but they’re not working from home either.”

Third workplaces allow to work outside of home constraints, concentrate on work in an environment that provides the possibility of such focus, coffee and sustainable, and (optionally) exchange informally with other people doing the same.

In my working environment, I have observed how this is really needed for people that don’t have the space at home to have a working desk, or have small children and can’t concentrate on their work.

According to the article, there are even startups created to benefit from the trend, not to mention older startups created around the concept of co-working spaces.

I have been working in my consulting company for 10 years not having any other office than a home office, being mostly in client’s offices and otherwise meeting people in coffees. I welcome such ‘third workplaces’ concepts and I firmly believe this will be a strong trend in the years to come.

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How To Overcome the Moral Link Between Value and Effort

Seth Godin in this post ‘Labor and value‘ reminds us of the various historical theories about value. In particular, the Marxist ‘labor theory of value‘ stating that value is proportional to the amount of labor (cost) gone into it. This theory however still provides a kind of moral limit to the value (price) we propose.

Having an estimate of value independent of cost is difficult to understand in business: I still have a tendency when I sell a product or service to believe that its value (price) should be somewhat correlated to the effort (cost) that has gone into it. This consideration is almost a moral statement: it is based on the consideration that it would not be fair to charge for significantly more than the direct effort gone into the item or service.

However, this thinking is quite wrong, for three reasons:

  • Value lies in the eye of the beholder, or the client (informed by the market / competition and its own needs). What I propose may have much more or quite less value for it than the effort that has gone into it. Selling for a large value (price) something that has taken not so much effort to build will pay for other services or products that I can’t sell for such a high price (such as new innovative product that are looking for their proper form to produce value for clients)
  • In addition to the direct cost or effort, we must consider that our product or service is also the result of years of practice and learning, and that a large part of the value is actually indirect value of this significant investment, and not just direct effort (this is particularly visible with new clients where we can often deliver huge value for very little effort just by bringing to bear our knowledge)
  • If we don’t sell at the right market price reflecting actual value, we will be in a weaker financial situation compared to competitors, thus impeding our capability to develop innovative products or services (still, it is good to sell slightly less that competitors to increase market share!)

In the end we should overcome the moral imperative of linking value with effort. Everyone values things differently, and this diversity is promoting innovation.

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How We Overvalue Fast-Growth Companies

This article by Tim O’Reilly ‘Two economies. Two sets of rules‘ bounces back on the question about why Elon Muks is so rich to conclude that there are really two different economies: the real economy and the gambling – stock market economy. And betting on the stock market leads to unrealistically high valuations.

In effet, stock valuation today is generally very high, and for some companies like Tesla it is unrealistic by any measure. I also observe this trend in (unlisted) start-up valuation, which are sometimes quite unrealistic – it is very difficult to expect a real economic payback in the foreseeable future.

We also know that the valuation of a company being listed is always significantly higher than when it is privately held – some of it the value of floating shares that can be sold at any moment, and some of it simply the effect of the market and a large number of possible buyers.

This is quite strange because at the same time we always underestimate exponential growth, which is what we could expect in this case ; but we tend to overestimate future company economic return in a situation where demand far exceeds supply of scarce stock or shares. I would tend to agree with Tim O’Reilly that there is an element of irrational gambling behavior in those cases (possibly compounded by the fear of missing out one of life’s greatest opportunities).

Stock market and high-growth start-up valuations being thus generally exaggerated, either one keeps away from it, or one sales before reality catches up again. Those are the only possible strategies!

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How to Take Delight in Uncertainty

Leo Babauta in his post ‘Delight in Uncertainty‘ explains how most people have difficulties with uncertainty in our lives, and highlights the positives associated with appreciating this uncertainty. As a recovering foe of uncertainty, this certainly resonates with me!

“We don’t like uncertainty, we want to avoid or control uncertainty, we get stressed when we can’t. And uncertainty is unavoidable: everything is uncertain all the time!“

So what can we do? First take stock that certainty is too boring: “We might instinctively dislike uncertainty, but in truth, we would be so bored without it.” Uncertainty is also the place to learn and to grow.

It is not easy to welcome uncertainty, and it does require an amount of practice. The usual corporate world generally does not provide it. Personally, I am practicing since I have started my company and I am not quite too sure who my clients and what my activity will be in 3 to 6 months! And I end up enjoying it because I know this provides space for unexpected opportunities.

Leo Babauta insists on some practices to learn to welcome uncertainty: notice the uncertainty, dance with it, set the joy in it and dance with it.

Whatever your approach, it is very satisfying to have a confident relationship with uncertainty. And yes, it takes time and practice because our Industrial Age education taught us about how to behave in a certain world. Nevertheless we can embrace uncertainty, and dance with it!

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How Many Unicorn Founders are Actually Repeat-Entrepreneurs

We discover in this interesting post ‘The Founders of Clubhouse, Spotify, Stripe, and 42% of Unicorns Have One Thing in Common‘ that most highly successful entrepreneurs are actually serial entrepreneurs.

It shows that unicorn founders are quite likely to be founders with a history of small scale success and having exited from previous ventures.

“Among the founders of billion-dollar startups, almost 60% were not first-time founders. In a randomly selected group of startups that had raised a minimum of $3 million in venture capital funding but didn’t reach unicorn status — the typical picture for a seed-funded startup — about 40% were not first-time founders. The statistic shows that repeat founders were more likely to start a billion-dollar company.”

Thus, “It turns out that the best preparation for starting a wildly successful company is founding a startup. If you have never started a company, the best preparation for doing so is to start something, maybe a club, a side hustle, or simply selling something online.”

From those considerations we can infer interesting observations for the business angel that I am: repeat entrepreneurs with a history of growing and selling their startups are interesting candidates for investment. I am aware that this statement reverses in terms of causality the simple observation of the paper, but at the same it demonstrates the possibility of overcoming an emotional attachment to a venture, as well as experience through the entire lifecycle of a startup, and hence this inspires greater confidence in the new project.

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How I Develop as Businessman

The trigger for this post is actually that I updated my LinkedIn profile with the names of the startups I have invested in as business angel, along with the 2 I am part of the strategic council (along with the 3 private companies I am active in with significant shares). Hence I felt the need for a follow-up and update from my 2015 post ‘How I Became a Businessman‘.

Since 2015 I have invested in quite a few new companies, some of them where I am busy, some where I am only an investor. I have also developed a business angel activity with more than a dozen investments. I realize how much I am continuing to develop as a businessman along this journey, and how this changes my perspective on things.

My latest post ‘How Being an Angel Investor Requires Developing Some Personal Rules‘ is part of this reflection on my evolution. I realize, as I have witnessed and lived through some tough difficulties in some companies, and sometimes utter failures, come across crisis like the Covid crisis, how my responses to those events have become more adapted and reflective. I also realize that I think more in terms of value created in the mid and lon-term than in terms of immediate income. And I start thinking about creating synergies about companies and how projects can be developed combining expertise and dynamics.

The perspective on the world offered by the viewpoint of the businessman-investor is quite different from the traditional employee perspective. It gives me hope though as we see a generation of entrepreneurs emerging that attempt projects.

Still my conclusion is that the priority is still the people and that nothing beats relevant teams being put together to support projects. And that this is what needs to be protected and enhanced, in particular when times get tough.

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How Being an Angel Investor Requires Developing Some Personal Rules

I am a modest angel investor, still with more than a dozen investments in the past 5 years, and also an active member of a business angel association. Therefore I am always keen to read about the practice and possible alternative paths. In this excellent post ‘A Weird and Wacky Approach To Angel Investing‘, Darmesh Shah reveals an interesting approach with some useful learning points.

Of course Dharmesh Shah is a very rich entrepreneur and therefore Angel Investor, (and write checks much bigger than the ones I can afford), still I find that his approach has got nice points to it. Basically he seeks to minimize time spent, and therefore:

  • He performs absolutely no due diligence but relies on a judgment on the team
  • He does not negotiate deal terms or gets involved in negotiations
  • He does not invest in later rounds as a matter of principle
  • He always sides on the side of the founders
  • He keeps his investments separate from his main company and role

And this seems to have worked for him in his specific conditions, including in terms of returns on investment.

On some aspects I believe he is quite right – there is no way you can do due diligence on an early stage startup apart from judging the team, and it is always better to stick to the side of the founders and the general objectives of the company. However I tend to personally get more involved in a handful of investments, out of interest or friendship, and I do sometimes participate to bridge rounds (however, never to later rounds as the interest as a business angel then gets quite diluted in terms of possible returns).

In general, I observe that becoming a more frequent business angel one has to develop some rules to minimise time spent and I am currently in this process too.

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How Instability of Income and Occupation is not New

In the interesting book ‘Hedge‘ by Nicolas Colin, the issue of career in the new Collaborative Age (which he calls ‘Entrepreneurial Age’) is addressed. “The mark of the Entrepreneurial Age is greater instability at every level . It leads to permanent fluctuations in households ’ sources of income . Today’s workers alternate overlapping periods of training , wage – earning , starting a business , looking for a job , working as a freelancer.”

This obviously seems a significant departure from the Industrial Age stable wage-earning model that would require substantial changes in the setup of our social security nets, and in our psychology.

But is that really such a big change compared to the current situation? I observe a lot of my friends that went into more conventional careers being now retrenched or otherwise deemed redundant and who actually feel a bit lost because they were not prepared to this instability. The fact that people are made redundant when they reach 45+, in particular in management roles, is not new, but it is often underestimated or not talked about. However it has always existed due to the pyramidal organisation of the corporation. It has just maybe been accelerated in the later years due to more frequent restructuring, mergers and acquisitions. Thus, although it accelerates, this instability is not new. It is just that we are not psychologically prepared for it by society.

I find from my experience that it is actually all in the psychology. I have started my own consulting company at 40, instead of continuing a conventional career in the management of established companies. It has taken me some years to get used to the ups and downs, adjusting my personal system to have sufficient reserves in case of crisis, and it is now not a problem any more (even with Covid-19!).

Thus, be prepared for instability of income and occupation. But that is not new, and it is just that we need to be more prepared for it psychologically than what is usually recognized.

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How the Right Start-Up Ideas Are About Making What People Want

In this interesting post ‘Billionaires Build‘, Paul Graham of Y Combinator explains what should be the most important criterion for selecting promising start-ups: producing what people want. And, Paul Graham adds, as it means also selecting future billionaires, it should also be the criterion for that selection.

His point is that exploiting people is not a sustainable proposition. Proposing something that people want is. And this needs to be demonstrable: “The crucial feature of the initial market is that it exist. That may seem like an obvious point, but the lack of it is the biggest flaw in most startup ideas. There have to be some people who want what you’re building right now, and want it so urgently that they’re willing to use it, bugs and all, even though you’re a small company they’ve never heard of. There don’t have to be many, but there have to be some.”

In addition, Paul Graham mentions it is important to be interested into what is getting built (which avoids getting out too early), and have a thorough understanding of future users (even better if you are using your proper service first).

Based on my experience what is really important is to have demonstrated that people are ready to pay for the service even if it is just a Proof of Concept with limited capabilities. That it solves someone’s problem by making life easier. If only all start-up founders could take this as a principle!

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