A VC in Vacationland

Calling the Baby Ugly

Image via Wikipedia

I unfortunately get to do this a lot--calling someone's baby ugly.  It is not a pleasant act--an entrepreneur has worked long and hard fleshing out their ideas.  I come along and call it ugly.

Of course, I don't literally do this.  Usually, I just say that I am not interested in making the investment. Then the entrepreneur wants feedback and I have to be honest.  Sometimes, too honest from the entrepreneur's perspective.

Anyway, how can you avoid this fate?  Here are a few tips on how to get to first base with a venture capitalist:

1. Try Foreplay--VC's do not like to be attacked by 50 page Powerpoints. The famous one page summary is a good place to start.  Believe me, if I like what I see here, you will get a call.  Forty nine more pages is unlikely to convince me.
2. Understand the VC's Space--I get a lot of proposals that have nothing to do with my expertise or interests.  VC's make these clear on their web sites.  Don't waste their time sending them stuff they will never read. Focus your efforts on those VC's specializing in your area.
3. Treat VC's with Respect--I get repeated calls from bankers and entrepreneurs who can't take no for an answer.  They ask for another meeting,and want me to spend time critiquing their presentation to help them prepare for the meeting.  If I like the idea enough, I will offer to do that up front.  If I don't, I won't.  Please do no ask me to improve upon your idea or business model.  If I think it has legs, I will offer to do it.

And by the way, I think all real babies are cute....

Green Logistics: Wine Cork Recycling

ReCork America announced a partnership with Whole Foods Market to recycle wine corks.  Image via Wikipedia

The six month trial will involve twenty-five Northern California  Whole Foods Market stores.  Customer will have to bring their corks to the stores for recycling. Recycled cork, unlike plastic or screw top enclosures, can be turned into flooring tile, building insulation, shoe soles among many other products.  Nike, an example of another green re cycler, allows you to return your old sneakers to be made in to road paving materials.

Although wine cork reuse is not a huge issue in the recycling world, the solution represents another example of the many start up businesses that will emerge around the green logistics space.  Over 13 billion corks are sold each year across the globe and you can bet that most end up in land fills.  Unfortunately, the number of corks collected by Whole Foods will be minimal.  What really needs to be done is that the distributors need to collect wine corks from retailer, bars and restaurants as well as the bottles (as they do for wine bottles in Maine) and recycle them.  Don't hold your breath waiting for this to happen....

There have been a number of other interesting start up companies emerging in the green logistics space.  My guess is that we will see a lot more point or micro recycling solutions appear in the next few years.

Keep the Main Thing the Main Thing

I get sent a lot of business books to review. Mostly, I browse them and see if anything attracts my attention.  Often, nothing does and the books head off to Goodwill.

Monday Morning Leadershipby David Cottrell is not new.  Published in 2002, the book is focused on how managers can do a better job leading teams.  You can read it in about 30 minutes.Book cover via Amazon It has good, basic insights on how to build and maintain effective teams.

The book reminded me of an important maxim in startups--making sure that everyone knows what the "main thing" is in their company or project.  Hint--it probably has something to do with value creation and customers.

One of my early mentors in consulting taught me to ask my team members the following question at the beginning as well as during a project: 

What are the most important things we need to accomplish for the client?

The usual outcome, believe it or not, was that almost every person on the team had a different (or slightly different) idea of what needed to be done.  The exercise provides a great springboard for discussing the project work plan and objectives, hopefully ending in a collective understanding of what the team has to accomplish.

Try it on your team today to see if all are on the same page. I'll bet that you find a lot of differing opinions. If all can get on the same page, it will make a big difference in your productivity, product quality and customer satisfaction. 

Loyalty

Loyalty is not a word that is used a lot in the business world anymore.  Customers used to be loyal to products and channels, but the Internet changed all that.  Employees used to be loyal to their employers, but layoff after layoff, often with little regard for the human implications, changed all that.  Companies used to be loyal to their suppliers, before the world of global sourcing and cheaper prices.

I am a perhaps just a little old fashion.  Loyalty still matters a lot to me.  It is a key ingredient of successful start ups, many of which would fail without it.

So why is loyalty so critical in the start up world when it has been so denigrated in the rest of the business world?

Simple. It makes a huge difference in performance.  Savvy founders realize that money, equity and bonuses can only go so far.  Loyalty is what gets the products out the door on time.  Of course, it does not hurt that there is a pot of gold at the end on the start up exit rainbow, but the huge uncertainty associated with the payout implies that other factors, such as loyalty to a cause, are at work driving high performance in the early years.

How can a founder gain and enhance loyalty in their team?

1. Straight Talk--good communications around exactly what is going on in the company are critical to maintaining loyalty.  The worst way to have information become available is via the grapevine. Communicating in company wide meetings is best so everyone hears the same message at the same time.
2. Lavish Praise--praise is the best, and cheapest, motivator a founder has to dole out to the team on a daily basis.  The best founders put their teams ahead of their own ego, letting them interact with investors, customers, analysts, etc. to make sure they feel appreciated.
3. One on One's--the best founders spend a lot of one on one time with their people at lunch or dinner, learning about them as individuals as well as part of the team.  Loyal people follow successful serial entrepreneurs from company to company because they are treated well and appreciated.