Lesson #280: Tell a Story When Marketing Your Company

I recently met John Replogle, one of the most successful entrepreneurs and consumer marketers I have ever met, which says a lot, given my rolodex filled with many rock-star entrepreneurs.  In that meeting, I asked him, with the sea of competition in your space (largely using the same ingredients), how do you break out from the clutter.  His answer was short and sweet, it's all about "telling the right story".  Let's learn more.

ABOUT JOHN REPLOGLE

John has held CEO, President or GM roles roles at some of the biggest consumer brands, including Guinness (Diageo), Unilever, Burt's Bees and Seventh Generation.  What caught my attention was the fact he was able to sell two different companies for huge valuations in a short period of time.  He sold Burt's Bees to Clorox for $925MM in 2007, and he sold Seventh Generation to Unilever for around $650MM in 2016.  He currently is a venture investor and advisor at One Better Ventures in Raleigh, who specializes in helping growth-stage companies in the consumer products space.  Their portfolio includes many companies that are off to the races, including Leesa, the online mattress startup, who has built up over $100MM in revenues in less than three years.  So, when John talks consumer marketing, you should listen!

THE BURT'S BEES STORY

Burt's Bees is the natural skin care business, doing around $250MM in revenue.  When you go to their website and click on their "About Us Page", nowhere do you see the word skin care anywhere on the page.  It leads with their founder, Burt Shavitz, a bee keeper who learned the benefits of bees wax as a lip balm.  It speaks the the company's purpose: the greater good for the company's customers, employees and environment, from the products through the packaging (simple, natural, responsible).  They speak to key benefits of the product, like being nutrient rich, born out of "nature as a laboratory", using "whole formulas" and "ethical and sustainable standards".  It's as if Burt himself is still personally making you their products out of nature's back yard. 

THE SEVENTH GENERATION STORY

Seventh Generation is the natural household cleaners business, also doing around $250MM in revenue.  When you go to their website and click on their "About Us Page", again nothing about the cleaners themselves.  It is all about their "mission" to make a difference and save the planet.  They talk about building communities, transforming commerce, nurturing nature, their philanthropic foundation and reporting on corporate consciousness.  Yes, you buy their product, and the planet lives to see another day!

WHAT THIS MEANS TO YOU

I have previously written about focusing on the "why", not the "what", when selling your products.  That post was trying to get you to speak less about your "features and functionalities", and more about how your product is going to help your customers drive more revenues, lower costs or improve their customer experience (which is what they really care about).

But, this post is taking it to the next level.  Now, we are speaking to creating a personality for your company itself, as consumers love a good story almost more than they care about the product itself (especially when those products are commodities).  Burt's Bees is not a manufacturer of skin care (a dime a dozen when said that way), it is nature's laboratory founded in a bee hive.  Seventh Generation is not a manufacturer of cleaning supplies, it is a steward for the making the planet a better place to live.

So, take out the "About Us" page from all your own websites.  Start scratching out anything that speaks to the "what" your business does.  Replace it with the "why" you matter to your customers, with the personality and positioning within the world of what your company aspires to be.  All while building a community around that passion point, to help you spread the word.  By better telling your corporate story, one that resonates with customers and differentiates you from competitors, hopefully massive sales will soon follow.

Thanks, John, for the inspiration here!


For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #279: Ali Express, The Amazon Killer You Never Heard Of

Back in Lesson #251, I talked about the U.S. based ecommerce companies being at risk to Chinese manufacturers selling direct on Amazon.  I wanted to provide a little more color on this topic, as I think I found the business that may actually be able to disintermediate Amazon itself!!

First a quick history on the evolution of ecommerce entrepreneurs, and their marketing and fulfillment platform of choice, over the years.

Phase 1:   Sell on your own site, market yourself and fulfill yourself.  That meant the ecommerce company needed to invest all the marketing dollars (and risk thereto), all the warehouse investment (and risk thereto) and all the inventory investment (and risk thereto).  Only big, well funded companies could make that work.

Phase 2:   Sell on Amazon, marketed by Amazon, fulfilled Amazon.  This meant the ecommerce company no longer has to worry about marketing risk (tapping into Amazon's huge website traffic) or warehousing risk (tapping into Amazon's huge distribution network).  They simply had to take inventory risk of funding their working capital investment and eating whatever inventory didn't sell.

Phase 3:  The newest generation of ecommerce entrepreneurs are bypassing Amazon altogether, since they take such a large fee for their marketing and fulfillment services.  Instead, they are marketing on Facebook/ YouTube/ Pinterest/ Instagram (keeping the marketing risk), sending traffic to their own "plug and play" Shopify website (which can easily be set up in a day at very little cost), with all orders fulfilled by "plug and play" Ali Express, a division of China-based Alibaba (who drop ship one-off orders directly to U.S. consumers from their Chinese warehouses.  So, here, the ecommerce company keeps the marketing risk (because it has uncovered profitable "impulse buy" or "financial arbitrage" marketing techniques through the social media sites), but no longer needs to pay Amazon a big fee for warehousing and distribution, and better yet, no longer needs to take any working capital or inventory risk, since Ali Express sells you inventory one item at a time, after it is already sold.  This is like lowering your startup costs and risks by 80%, and opening up a sea of entrepreneurs trying to figure out this model.  This is where the market is today.

Potential Phase 4.  If I were Alibaba, I would figure out how to launch an Amazon killer that aggregates U.S. consumers (no marketing risk for ecommerce entrepreneurs, like Amazon) and fulfills orders by Ali Express (no warehousing risk, like Amazon, but with the added benefit of no inventory risk, unlike Amazon).  With a little marketing effort in the U.S., maybe Ali Express becomes that solution, as nothing prevents U.S. consumers from buying direct on that site today.  That is the next evolution of where I think the market will go, and could end up being an Amazon killer in the process.

Now we know why Amazon is so focused on adding international suppliers to their site--to get prices down to international wholesale levels to stay competitive with Alibaba.  But, that still leaves Amazon saddled with their huge warehousing and distribution investment in the U.S., which Alibaba does not have.  Which explains why Amazon is so focused on same day shipping, as their core competitive advantage vs. Alibaba and all others, appealing to the U.S. consumers' desire for immediate gratification.  But, if consumers are willing to wait 2-3 weeks for their ecommerce orders to arrive from China, they may be able to save material monies, as prices on Amazon will end up higher than Ali Express when the dust settles, to cover their warehousing and distribution investment.

Food for thought, for all you ecommerce entrepreneurs out there.  It has never been easier to launch an ecommerce business.  Amazon made it easy with their Fulfilled By Amazon solutions and Ali Express has made it even easier, drop shipping direct to U.S. consumers from China, without you needing an inventory or working capital investment.  Time will tell how Alibaba ultimately plays the U.S. consumer market, potentially taking your start up investment down, closer to zero, as long as marketing arbitrage opportunities exist on the social media networks where you can get an immediate payback on impulse-buy oriented products.  Maybe Alibaba and Facebook should partner with each other here, taking Amazon off its mighty perch?

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #278: Entrepreneurs Mellow & Mature With Age

I've been an entrepreneur for most of my life. I started an odd-jobs business in high school, founded a collectible comic-book business in college and launched my first venture capital backed startup -- an adventure-travel company -- in my 20's.  And, my entrepreneurial endeavors continue today. I'm in my late 40s, running Red Rocket, looking for companies to buy and advising hundreds of early-stage businesses.

Given this winding road of past experience, my approach to managing businesses today is very different than when I was younger. The experience I now bring to the table has materially mellowed me as a leader. But, I didn't have that background or that perspective when I was younger.

EXPERIENCE COLLECTS WISDOM

I'm no longer a freshly minted CEO trying to figure it all out and making a lot of mistakes in the process. Decades of battle scars have sharpened my business thinking. With that hard-earned experience, I've accumulated years of learning. Not much thrown my way today is new. Chances are, I've already seen some version of it in the past. I simply dust off the old playbook and adjust from there, without having to think about the challenge as a first-time obstacle.

WISDOM DRIVES CONFIDENCE

Business decisions are like anything in life: The more you've done it, the more comfortable you get. With that comfort comes a sense of confidence that you're headed in the right direction. First-time entrepreneurs often lack that insight and second-guess their paths. Tom Brady didn’t become the greatest Super Bowl-winning quarterback overnight. It took years of practice, memorizing playbooks and logging game-time experience. Those combined effects propelled him to success, and he's now one of the most confident quarterbacks in the game. Entrepreneurship is no different.

CONFIDENCE LEADS TO EFFICIENCY

The better you know your subject matter, the more efficiently you can execute your plan. I don’t necessarily need to stay up all hours of the night trying to figure out how to do something. I can make decisions faster now, and I know how to best invest my time. I don't get bogged down in the weeds. I've discovered what actions lead to the maximum ROI on my time, research and energy.

EFFICIENCY THRIVES ON DATA

In the old days, I'd get all excited about the features and functionalities of the product or service I was building. Today, the product doesn’t matter so much. I'm more focused on the economics around that product or service. What is my average ticket? Gross margin? Repeat sale rate? Churn rate? Cost of Customer Acquisition? Lifetime revenues? Return on marketing investment? Without solid business economics, the rest is just noise. I've become increasingly data-driven in my decision-making. I'm always looking for the profitable levers that I can pull to help scale a business.

DRIVEN BY A WICKED SMART TEAM

Age has taught me I'm not in this battle by myself. Surrounding myself with the smartest people I know will also make me a more effective leader and executive. I'd go so far as saying I hope my direct reports are a lot smarter than me -- and no, that doesn't intimidate me. So many young entrepreneurs need to feel as if they're the smartest person in any room. I empower my team members to do their jobs, and then I get out of their way. I don't need to micromanage every one of their decisions as I did when I was younger.

WHO KNOWS NOT TO PANIC

Most important, I no longer panic when things start to go wrong. Many first-timers sound the alarm early and often. That's doubly unfortunate because panic typically creates unnecessary chaos and stress right when an organization needs to be its most focused on solving the problem at hand. Take a breath. It all will work out in the end.

IN SUMMARY

Here's my message to all the first-time entrepreneurs: gather up experience (directly or through mentors) to help bolster your confidence and help make you a more efficient, data-driven decision-maker who's comfortable leading a team of wicked-smart and empowered executives. And for goodness sake, don’t panic when things start to go wrong. There's always a logical fix.  If you follow this guidance, you can stop pulling your hair out in the wee hours of the night. Instead, you'll get that time back and can transition to living a well-balanced life -- all while watching your bank account grow along with your thriving business.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #277: Revenue Share Loans

I recently met Benji Taylor Jones and Jim Verdonik, the crowdfunding team at Ward and Smith (a leading law firm in Raleigh), who introduced me to a new type of loan that I had never seen before, called a revenue share loan. Apparently, revenue share loans are being popularized by crowdfunding – especially in offerings to both accredited and non-accredited investors in Regulation CF and state crowdfunding offerings.  Let's learn more, to see if this is a valuable financing vehicle for your business.

WHAT IS A "REV SHARE" LOAN?

A revenue share is a loan that is paid back over time by the borrower "sharing" a percentage of its "revenue" at regular intervals until it has returned to the lender a fixed return.

For example:  let's say a local brewery needs $100,000 to expand (amount you can raise is capped at $1MM per year).  The business borrows $100,000 from investors with a promise to return to them a fixed amount (say, 1.5x the amount loaned) over time.  The business then pays off the loan by paying investors a percentage of its revenue (whatever is a comfortable amount for your business, say 5%-10%) in periodic (i.e., monthly or quarterly) installments until the fixed return (in this case $150,000) has been met.  As an investor, you would receive your pro rata share of such payments based the amount of money you loaned the business.  The business's obligation could be open ended (meaning the loan remains outstanding until the stated return is met), but more often it might pay the return back within a specific time window (say 3 to 5 years, which may also require the business to make a "balloon payment" at the end of that period if there is any shortfall).  The shorter the length of time the company takes to fulfill its obligation -- the quicker the payout, the higher the rate of return (ROI).  So, investors "hit the jackpot" on loans that have a five year maturity date if the company repays the loan in three years, because revenue increased faster than the company projects.

Revenue share arrangements have lots of labels– they can be called a "revenue share loan", a "revenue share note",  "revenue share agreement," "revenue share interest" or replace "revenue share" with "royalty" in all of the above.  But whatever it is called, a "Rev Share" (as Benji and Jim like to coin it) is a "security" and that makes it subject to federal and state securities regulation.

Rev Share is rapidly becoming a popular choice for companies using "investment crowdfunding" exemptions to access capital.  Crowdfund Capital Advisors recently released data focusing on the "small but significant group" of companies utilizing Rev Share to raise capital under Regulation CF.  Picking up on this trend, Startwise.com, the newest FINRA approved Regulation CF platform, is specifically targeting Rev Share, allowing anyone to invest in businesses for as little as $100.  LocalStake has been featuring Rev Share for the small businesses it helps raise capital for several years.  But Rev Share isn’t a new concept.  It has been used in the oil and gas industry, real estate and film and music industries for years.  Franchising, and even share cropping, are other forms of Rev Share that long preceded Ccrowdfunding for other business startups.

WHY ISSUERS SHOULD LOVE "REV SHARE" LOANS?

Crowdfunding is popularizing Rev Share, because many retail investors prefer an immediate monthly or quarterly investment return to waiting five to ten years for an equity investment to hit a home run.  Every dollar an investor gets back in monthly payments reduces investor risk.

It has the potential to be a great win-win for investors and small businesses – particularly those businesses that are close to, or already have a history of, producing revenue.  Take our brewery example, as an investor if you know that you basically get a penny of each beer the brewery sells each month (or sometime like that), then it's not hard to imagine where you will go for happy hour on Friday afternoons; whether you might buy that extra round for your friends while you are there or where you recommend your neighbor buy the keg for the next Labor Day cookout.  This makes it great for businesses with products to sell with relatively high margins and those with repeat customers (think food, booze, software).

Rev Share creates an incentive for investors to buy a company's products and services and to become marketing ambassadors for the business, which in turn builds revenue the company needs to repay its loan.

THE TOP 10 BENEFITS OF "REV SHARE" LOANS FOR CROWDFUNDING:

1. Rev Share is NOT equity.  Investors are not buying any ownership interest in the business.  Investors who purchase Rev Shares have no rights to vote or control management.

2. Rev Share investors are creditors, not shareholders or owners.  Thus there is no "messy cap table" as a result of crowdfunding.  Once the promised return is paid, the obligation is cancelled and any contractual relationship between investor and the business is terminated.

3. Rev Share is NOT dilutive.  Rev Share does not dilute the ownership, control or economic interest small business owners (and their core investors) have in the business.

4. Rev Share avoids setting a "valuation" on the business.  The company does not need to set or negotiate a valuation of its business to sell Rev Share.  

5. Rev Share is offers investors liquidity and immediate ROI, assuming the business is close to or producing revenue.  The quicker the obligation is paid, the higher the ROI.

6. Rev Share does NOT require an exit strategy.  Most small businesses considering investment crowdfunding are run by owners looking to grow the company long-term and stay true to the mission that lays at the core of their business.  They are not looking to have an exit (by selling the company or going public sometime soon).  With Rev Share investors do not need to wait for an exit to earn ROI.

7. Rev Share reduces default risk.  With a Rev Share the amount a company owes each measurement period varies solely based on the amount of revenue it receives.  This reduces the chance of default when compared to traditional loans where the borrower must find cash to service set interest payments on a regular basis or risk default (and the bad things that accompany missed payments) irrespective of how it business is doing.

8. Rev Share is  based on projected cash flow and is good for companies with seasonal or variable sales.  Since Rev Share is based on projected cash flow, it is a really interesting alternative for companies that experience seasonality in their cash flows.  During months with higher revenues, they can repay more of their debt.  On the flip side, when sales are slower, their repayment would be less.

9. Rev Share has benefits when compared to traditional bank financing.  While it's true that the cost of this kind of loan can be more expensive than traditional bank financing (i.e., the implied interest rate paid to investors is higher than what a bank might charge), many small businesses that are good Rev Share candidates are not ideal candidates for bank financing.  In addition, a business using a Rev Share typically avoids bank requirements for collateral, personal guarantees, security interests on assets and other financial covenants.

10. Rev Share is stackable.  You can combine Rev Share with other types of financings to fund a single project.  For example, a business could raise capital through an accredited investor equity offering, a secured bank loan or equipment financing loan in addition to a Rev Share offering (if the other investors and bank permit).

Crowdfunding is mostly about giving ordinary people the chance to invest in businesses (and products and services) they love.  Rev share builds brand loyalty and incentivizes customer-turned-investors (who are already committed to the business) to buy more products and services and to encourage their friends, friends, neighbors and colleagues to do the same.  This in turn increases the company's revenue and, potentially, allows the company to pay the loan faster and at a higher ROI for its investors.  So, when all the stars align and things work as planned, Rev Share is an optimal solution for companies seeking capital and customers-tuned-investors looking to support the businesses they love while having access to a relatively quick and decent ROI.

WHAT TYPE OF BUSINESS IS A GOOD "REV SHARE" CANDIDATE

The business attributes Benji and Jim look for when they recommend Rev Share deals are:

• Either track record of having revenue or certain near term prospects so that investors will start getting money back within a few months.

• Companies that are or soon will become profitable.  You can't repay debt from revenue that you have to spend to pay your operating expenses.  Revenue growth without profit growth can cause borrowers to default, because their monthly repayments increase at the same time their other expenses are increasing.

• High margins hold the potential for profitability, but that's only true if management controls expenses.  So, the best Rev Share candidates are business where expenses don’t grow as fast as revenue.

• Projections for high revenue growth rates enable companies to repay their loans from the faster growth they generate from the loan proceeds.

• The business can make a good case that every dollar invested in marketing or expanding production has historically resulted in multiple dollars of additional revenue.

Benji and Jim have developed financial modeling tools that they can use to help you set interest rates and projected repayment installments based on different terms you can consider offering investors, to help you determine if this is a good road for your business.  But, in a quick example, let's say your business is planning to grow from $1MM in revenues today to $3MM to $5MM to $7MM in the next three years.  If you raised the $1MM cap, meaning you need to repay $1.5MM (1.5x) within the five year cap, a 10% Rev Share would repay $300K in year one, $500K in year two and $700K in year three, for a total of the full $1.5MM.  Leaving you a two year cushion, in case things don't go to plan, which they never do.  And, don't forget, you can structure this with a lower Rev Share (e.g., 5%, and set up for a balloon payment in the final year), if more desirable to you to "push the can down the road", understanding the risks to cash flow in that last year.

THIS SOUNDS TOO GOOD TO BE TRUE, WHAT'S THE CATCH?

Well, there are few challenges with Rev Share:

1. Repayments can slow a business' ability to reinvest in long-term growth compared to equity. Selling equity promotes faster growth because there is more money to reinvest in growth every year (because you are not repaying debt installments).

2. Paying investors is an ongoing expense and headache.  It also requires sharing periodic revenue numbers with many people.  This info may leak to competitors and customers.

3. In an LLC or other pass through entity, owners will be taxed on phantom profits used to repay the loans.  Not a problem with equity.

4. Future lenders may be unwilling to make new loans to the company while the Rev Share debt is outstanding.

5.  Let's not forget, this is debt, and will default the company if it is not repaid.

CAN YOU RAISE "REV SHARE" FUNDS OUTSIDE OF CROWDFUNDING?

Rev Share is absolutely an available alternative to any kind of investment (not just crowdfunding) – the terms may get impacted by the typical goals of the "class" of investor and the degree to which it can be marketed to them.  For instance, Benji was just talking to a company that was looking at a form of Rev Share to use for an angel round.  Angels typically have higher ROR objectives than the crowd – so the structure may need to target a higher payout (3x to 5x) and the question becomes whether there is sufficient margin to reach that threshold.  So, it becomes a numbers game and whether the deal is marketable to specific types of investors.  But, practically and legally, there is no reason you cannot use a Rev Share in a traditional offering or combined with another offering (e.g., like combine Rev Share with a little less equity than you might offer in the normal angel deal).
This product is so new, that there is a lot of education that  needs to go on with all types of investors in this area. 

INVESTOR CONSIDERATIONS

Investors also should recognize that there are always risks associated with any kind of investment, and particularly investments in small businesses and startups.  There is no guarantee that the business you love will actually continue to operate successfully or derive sufficient revenue to repay your loan.  Many of the things that might be appealing for companies about Rev Share cut the other way for investors.  For instance, unlike equity, Rev Share investors do not have any voting, economic or management interest in the business.  Although they are creditors, they typically do not benefit from personal guarantees, security interests, financial covenants, or other restrictions that protect banks or institutional investors.  Often Rev Share loans can be subordinated to other borrowings by the business.

Although Rev Share could be an attractive diversification strategy and offer the opportunity to support the businesses you care most about -- it is important you consider all of the terms being offered by the company, including whether the company is generating revenue, to minimize your risk of not getting paid back and maximize your expected return.  You should consult your personal tax, accounting and legal advisors before making an investment.

LIVING TOGETHER AFTER THE DEAL CLOSES

Raising capital through investment crowdfunding is complicated.  Businesses need to be prepared for added regulatory and compliance costs, as well as the distractions that accompany taking investments from the "crowd".  Management must provide information and respond to these investors, even if they are not "owners" of the business.  Businesses utilizing Rev Share must manage the payout process carefully.  Rev Share has a more complex tax impact than say, straight debt or equity, due to the variable nature of the installment payments.  Businesses and investors alike will need to understand how tax payments and paperwork will be handled post-closing.  (Many platforms, like Streetwise and LocalStake, offer post-closing payment services to help companies manage these hurdles.)

Like in any marriage, having a long lasting mutually-beneficial relationship with Rev Share depends on whether your projections were realistic and how you manage your business.  So, be careful your love of Rev Share doesn't end in a messy divorce.

Thanks again, Benji and Jim, for helping me to share your wisdom with our readers.  If any of you would like to reach out to them for help, feel free to directly reach out to Benji at (919) 277-9142 or btjones@ wardandsmith .com.


For future posts, please follow me on Twitter at: @georgedeeb.

In Sales, Silence is Golden

I have written dozens of useful how-to lessons for driving sales, but perhaps none is more important than this one. This is the day that you learn that driving sales has very little to do with what you have to say. It has everything to do with what your client has to say.

The magic sauce to closing a transaction is knowing how to ask probing questions, then sit back and listen.  Keeping your mouth shut is typically a really hard concept for a salesperson to grasp. But, when they do, jewels of insights about your customer and their real pain points will quickly rise to the surface the more they say.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

The 6 Steps to Taking Your Business Global

If your business has seen successful growth here in the U.S., it most likely will see success in other countries, as well.  And you may want to lock up those markets, before some other company does.  I recently met a startup that had successfully tripled its revenues, largely from the results of a successful international expansion effort.  I wanted to share those learnings with all of you.

Read the rest of this post in Forbes, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #276: Lessons from Two Unicorns (LendingTree & Blackboard)

At the recent CED Tech Venture Conference in Raleigh, I sat through the presentations of two successful entrepreneurs that both built companies worth over $1BN (unicorn level valuations).  The first was by Doug Lebda, founder & CEO at LendingTree, the marketplace for finding loans, now a publicly-traded company with a market capitalization of approximately $3BN.  The second was by Michael Chasen, the founder & former CEO at Blackboard, the education software business that was recently sold to a private equity firm for $1.7BN.  It's not every day you get to learn insights from companies that scaled to unicorn levels, yet alone two in one day!!  So, my pencil was feverishly writing to keep up.

LESSONS FROM LENDINGTREE

The summary of Michael's presentation was that most entrepreneurs follow the wrong process on ideating and rolling out new ideas.  Most entrepreneurs follow a linear process of causal-based thinking, most typically in this order: study market, brainstorm, ideate, budget, approval, prototype, build, sell, go to market and pray.  This process can often take over a year of time, from start to finish.  And, is filled with pitfalls along the way, since it does not start the process by identifying your key strengths, assets and relationship to best exploit before you begin.

Instead, Michael follows the principles of effectuation, a process pioneered by UVA entrepreneurship professor, Saras Sarasvathy, in 2001, based on her research of 27 entrepreneurs in the late 1990's.  There are five core principles that define effectual logic, as documented on Wikipedia and as further shaped by Michael:

1. The Bird in Hand Principle. Entrepreneurs start with what they have: who they are, what they know and who they know. The entrepreneur does not start with a given goal, but with the tools he or she has to work with.
   
2. The Affordable Loss Principle. An entrepreneur does not focus on possible profits, but on the possible losses and how they can minimize those losses.  Manage to risks you can afford to take in terms of time, money or reputation.
   
3. The Crazy Quilt Principle. Entrepreneurs cooperate with parties they can trust to make a pre-commitment.  You look for partners with "skin in the game" by asking the question "what would it take to get your commitment" on a barter or low-cost basis.
   
4. The Lemonade Principle. How do you turn "lemons" (surprises) into "lemonade (pivots to new opportunities).
   
5. The Pilot-in-the-Plane. The future cannot be predicted, but entrepreneurs can control some of the factors which determine the future.  This includes creating your own market, creating a culture "grounded in change" and having new hires "self-eject" themselves after their first 48 hours of not fitting in.

By following these principles, you are able to take an "unknown road" which can take a year to travel, down to a "known road" which you can navigate in a couple months.  And, we all know how important speed can be in increasing the odds of success for a startup.  Doug was able to get all 500 employees at LendingTree to think like entrepreneurs, and not a big company, by following these principles for all of the key decisions they made along their growth curve.

LESSONS FROM BLACKBOARD

Michael came up with his own five pieces of wisdom gained from his time at Blackboard:

1. Be passionate about what you do (even if others are not).
   
2. Focus on the business (not the office)
   
3. Share the vision (but sell the execution)
   
4. Constantly seek advice (but make sure you are the expert)
   
5. Realize disruption changes everything (again and again)

Which he then amended to six pieces of wisdom by adding:  when you are done, do it all over again!!  He is practicing what he preaches, by recently taking over as the CEO at PrecisionHawk, a leading seller of commercial drone technology.  Hopefully, he is on his way to building his next unicorn company.


Anyway, I thought there were some good pearls of wisdom in here, from two guys that know what they are talking about.  So, I share these nuggets with you, to apply to your own businesses.  This is the follow on piece to Lesson #275:  Lessons from the Best VC Ever (John Doerr), also from the same conference.


For future posts, please follow me on Twitter at: @georgedeeb.