Not Such a Good Idea.

Have you ever had what seemed to be great idea, but the more you looked into it the dumber it became. That happened to me this week for my blog topic. I finally decided to trash the idea, but then what to write about? How about assessing whether an idea warrants further investigation or action?

Nearly, 25 years ago I had a boss that said to me, "I can come up with 100 ideas a week. Your job is to tell me which one of those 100 are good." Nineteen years ago I began a career in venture capital. During that nineteen years I have often thought of that former mentor's words. That is much of what I did in those nineteen years. The task is much more difficult than it seems. Interestingly most successful venture capital firms invest in about one idea for each 100 they see.

There are all sorts of checklists, rules of thumb and and models that one can and should use to help deteremine which deals are viable. But this only gets you so far. Certainly, out of 100 deals there are 5-10 that have a chance - probably two or three that are about the same quality. How do decide between these? Unfortunately, I don't believe it's taught. Life's experiences teach you that certain people you can trust and others you cannot or who is going to work their tail off and who will turn tail and run.

Those same experiences teach you that certain types of business are much more difficult to pull off than others or that certain things must be in place before an investment is made. It teaches you that even though you can take advantage of situation you shouldn't. It will usually come back to bite you in the rear.

Finally, and perhaps most importantly you learn that there is a time to admit your mistakes and stop putting good money after bad or investing valuable time. Usually, the first time you wonder whether something is going to work is the time to get out. Most of us have to much ego to make that decision at that time, trying to save the investment or project instead.

I'm sure glad I decided not to write about that initial topic, but like most, I waited until the last possible minute. That's why I am writing this at 3:00 p.m. Friday. Live and learn.

2010 State of Entrepreneurship Address

2010 State of Entrepreneurship Address

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Is Time More Important to an Entrepreneur?

My 9:00 a.m. meeting was postponed for a few hours due to icy roads all between Omaha and Des Moines. This gives me an opportunity to write my weekly blog. How often when we get unexpected free time do we wile it away on less productive activities? I know I do it far too often. In many cases this is ok after all we all need some down time.

Over the years, one thing I have observed about successful entrepreneur is that they nearly always use these little segments of “found” time to accomplish something that might otherwise go undone. I’m not sure whether this trait is due to the enormous number of tasks they have on their “to do” list, whether it’s that most are ADHD and can’t stand the calm or some other personality trait.

It’s not that they don’t allow for down time, but they schedule the downtime for family and friends, for exercise or for reading. So many have told me, “Oh, I don’t watch TV.” or “I don’t have time for video games or chat rooms.” From a mental health standpoint perhaps it’s better to have an hour or two in front of the “boob tube” or tweeting. I just know successful entrepreneurs just don’t. Instead they jump into action.

I think part of it is that they love to do many of us hate. They love the challenge of e making that cold call. They aren’t dissuaded by rejection because they know they are right and will prevail, whether or not they truly are. They hate the boredom of keeping books or developing policy. They are after all entrepreneurs, not administrators.

They are a combination of dreamer and doer. Too many of us are one or the other. Not that the combination of doer and dreamer is enough. There must be a balance of passion and discipline. There must be some business knowledge and a willingness to take risk. It appears to me that perhaps there must also be a feeling of urgency - A feeling that every second must be optimized. Do you have this trait? Is it absolutely necessary to be successful? Let me know what you think.

Does My Business Need to Be Concerned with Intellectual Property Issues?

Many companies that are not technology driven believe they have no reason to be concerned with intellectual property matters. After all, their product cannot be patented or copyrighted. But is your product the only thing that needs protection? Aren’t there other types of intellectual property? What about user manuals? Should they be copyrighted? Do you need to protect infringement of something written in your newsletter or some other publication? And what happens if one of your employees plagiarizes when publishing something under the company’s name? These things may seem trivial but have tripped up companies in the past.

One of the most overlooked types intellectual property is that involved with branding. Most business people know that trademarks can be registered to protect a company’s brand but many do not bother registering their own name or logo. I would also, be willing to bet that most small businesses have no idea of the extent of registered “marks”. Not only are there trade marks, but service marks, color marks and collective marks. For instance, Caterpillar Yellow and John Deere Green are registered as part of their intellectual property portfolio.

For years, Waukee Community Schools in Iowa was using a “W” on all of there athletic uniforms, school promotional clothing and publications. A few years ago they, along with other schools were ordered to discontinue use of that particular “W” design or face legal action by the University of Wisconsin, even though it was purple not red, as is Wisconsin’s. You see the University of Wisconsin had registered that particular “W” design as a logo, regardless of color.

Some businesses that have protected the intellectual property in their product forget that they have other property to protect. I was on the board of directors of a software company about ten year ago. This company had many registered copyrights on its software algorithms. One day in a board meeting the President stated that a competing company was infringing on the brand name of our primary product line. When I asked whether we had registered the trademark, he replied, “No, they actually have it registered.” Guess what, we were the infringing party.

Finally, many companies have intellectual property that cannot be registered such as trade secrets and confidential information. This property may not have the protection of a patent, copyright or trademark, but it may have some limited legal protection depending on measures taken by the company to keep it out of other’s hands. If you have a secret recipe or a confidential customer list, you may need to understand what safeguards should be taken to protect this information.

I am not an attorney and would never opine on whether your company has intellectual property or needs an intellectual property attorney. I have served on over a dozen company boards and have seen companies caught with their pants down. I do think it is prudent for any business that has a question about intellectual property to speak to a qualified attorney about your particular situation.

What is Your Definition of an Entrepreneur?

I have been working with two groups lately. One is a group of entrepreneurs in a metropolitan area and the other a group of small business service providers in a non-metropolitan area. Both need to define the term entrepreneur, in order to move forward with future initiatives.

Having taught entrepreneurial finance at the college level, I have nearly a dozen definitions dating back to the 18th century and evolving to the 21st century - Most developed by economists and finance professors. These definitions refer to innovation or creation of something new. They mention redirecting resources in a different manner. Words like visionary, risk taker, barriers to entry, opportunity and uncertainty are often used. The popular press seems to have a much broader definition, many times using it interchangeably with any small business owner. Others see the definition as somewhere in between.

I certainly don’t believe that all small business owners are entrepreneurs. Is the son or daughter who inherited a clothing store, manufacturing facility or restaurant from their parents, an entrepreneur? Is the person that decides to build a convenience store at a busy intersection where two others already exist, an entrepreneur? I would argue no. But, what about someone one who starts the same type of business in a community of 2,000 people where no one has tried it before? Does it depend on the circumstance – on the location?

I believe that if we are going to promote entrepreneurism in rural or even small urban areas we must use a broader term than that used in Boston, San Francisco or even Madison, Wisconsin. For those, like myself that have seen hundreds, if not thousands of business proposals it may be similar to Justice Potter Stewarts’ definition of Pornography, he stated in a Supreme Court decision, “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it….” Just like those that have seen hundreds of business plans, Justice Stewart had seen his share of pornography. You see, Stewart was a Navy lieutenant during World War II. He was the watch officer for his ship that was based in Casablanca. He had seen volumes of locally produced pornography brought back by the ship’s crew and knew the difference between the hardest of hard core pornography and that which may be slightly offensive to some. He called it his “Casablanca Test."

But if we use a “Casablanca Test” for the definition of an entrepreneur we are apt to be criticized as Justice Stewart was, as being too vague. We need to have a workable definition for all those that don’t know it when they see it. We need a workable definition yet quantifiable. Maybe it’s several definitions. I’m not sure what it is. So, I would like to hear your definition of an entrepreneur. Please comment below.

Entrepreneurial Advisor: A Cautionary Tale About Partnership - Entrepreneurship.org

Entrepreneurial Advisor: A Cautionary Tale About Partnership - Entrepreneurship.org

A Cautionary Tale About Partnership - Entrepreneurship.org

A Cautionary Tale About Partnership - Entrepreneurship.org

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