Paid To Drop Out Of School

Would you drop out of college for $100,000? That is exactly what entrepreneur Peter Thiel is proposing to 20 lucky winners of his foundation's "20 Under 20" contest. The winners will receive a two year stipend valued at $100,000 and mentorship from a network of entrepreneurs en route to creating their own startup company. The only stipulation is that the winners drop out of college or high school to focus full time on building their business.

I found the Thiel Foundation's article on The Economist website. You can read the full post on Thiel's quest to incentivize drop outs here. So why would a college graduate who made millions co-founding Paypal and investing in Facebook want kids to drop out of college?

"We're excited to be working with them, and we hope they will help young people everywhere realise that you don't need credentials to launch a company that disrupts the status quo," said Thiel.

Thiel contends that most kids go to college to avoid thinking about the future and that, by incurring so much debt, many students are actually more at risk by being stovepiped into a career in order to pay back that debt. His foundation is targeting young entrepreneurs who have a plan to create wealth but may otherwise be tempted into attending college versus carrying out their dream. Of course his foundation is drawing plenty of criticism but Thiel responds by saying that people can always go back to college.

I have a few thoughts on this interesting endeavor.

1. We live in a society that loves credentials - Earning a college degree is a great thing. I enjoyed my college educational experience and wouldn't trade it for anything. However, is a college degree really an indicator of success? I would argue it is what you did to reach that point that contributes to your likelihood of success. Yet we as a society love someone who is stamped with a certification, a degree, or a license. Perhaps it the most consistent, quickest, and easiest way to justify your betting on an individual's future prospects but it is by no means a sure thing. I have definitely noticed this throughout my military career, as the military culture places a premium on having a masters degree and no merit in what that degree is in, the quality of the institution, or how the individual has leveraged the skills that were supposedly enhanced by that degree. My sense is that Thiel is frustrated with credentialism within our education system and that is part of the reason he started his foundation.

2. Education leading to action, action leading to education - My educational experience definitely helped me launch my own entrepreneurial venture. To say otherwise would be a lie. That being said, I have often wondered whether it was necessary for the success of my charity. Would I have been able to work alongside my friends to create our charity with a lesser education, or no college at all? I am not sure, but my guess is that based on my values, personality, and skill set that I could have created something special given the same amazing team to work with. Maybe not to the same extent, but I don't think the creation was dependent on my education. What I find interesting is that most people think that you have to learn before you begin, whereas I find I learn the most by beginning. My education definitely supplemented my ability to launch my charity but I think launching my charity really solidified all that instruction into actionable knowledge and experience.

3. If you are passionate and have a plan don't fear rejecting the status quo - I didn't start Checking For Charity until after I graduated college. However, I have experienced the social pressures and comments of a society who feels that it is a necessity to go straight to college after high school. My senior year of high school I was drafted in the United States Hockey League. It had been a goal of mine to earn a Division I Hockey Scholarship since I was a young teen, and in order to achieve that goal I knew I had to play junior hockey. Even prior to getting drafted, I did not apply to a single college. People thought I was crazy. Even people in the hockey community thought it was risky. But I knew that it was my passion and that I would achieve the goal no matter what. I had a plan of how to achieve my goal, and I had the passion to get me there. It's funny because looking back I really didn't have any fear. I knew I would make it happen. Since I have gotten older and taken on more life responsibilities that same confidence can be a bit harder to come by, but I truly believe that the lesson still holds true. If you love what you do and have a plan to accomplish your goals don't listen to the naysayers....make it happen. Thiel discusses a similar theme in his video interview below.

You can view the full video of his interesting interview below.

Learning To Be An Entrepreneur

Seeing as I have all but abandoned BadskiBlog in pursuit of a better GMAT score the last month, I thought it was fitting to sneak in a blog post about MBA's. There is a steady debate within the business community on whether entrepreneurs are born or taught. My sense is that entrepreneurs are molded both by gifts at birth as well as their experiences and education. Fortune Magazine took a stab at this argument in a recent article in their small business blog by focusing less on the endless debate and more on the opportunities available to hone the entrepreneurial attributes you can control; your education.

Gregg Fairbrothers wasn't born to business. He grew up in an academic household. "I didn't know a debit from a credit," he admits. Fairbrothers studied earth sciences at Dartmouth in the '70s, got his master's at Rutgers, and eventually moved to Tulsa, where he joined Samson, a gas driller, and earned his chops at the right hand of the company's "hard-nosed founder." He picked up an MBA, but that was "just to get the toolkit," he says. "I learned my business on the job."

Today, as founding director of the Dartmouth Entrepreneurial Network, Fairbrothers teaches a wildly popular course on entrepreneurship at the Tuck School of Business.

The article lists a few interesting facts on teaching entrepreneurship and how it has really exploded in the past few decades.

Twenty years ago teaching people how to start their own businesses was a sideshow at B-schools, of scant interest to future consultants and Wall Streeters. Today entrepreneurship education is everywhere. More than two-thirds of U.S. colleges and universities -- well over 2,000, up from 200 in the 1970s -- are teaching it, and they offer it to all comers: social workers, farmers, and even musicians. The field is thriving, but have we figured out yet the best way to teach this stuff? If not, are we at least getting better at it? And can you even teach someone to be an entrepreneur?

Although Fairbrothers teaches entrepreneurship it seems as though he shares similar sentiments that I do, acknowledging that entrepreneurship is likely a combination of born attributes and learned skill. I have posted a few of his most enlightening comments below.

Fairbrothers has heard what critics say. To a point, he shares their doubts. He's not sure anybody has figured out yet how to define entrepreneurship, much less measure it.

According to a Kauffman Foundation study published early this year, the surge in entrepreneurial education during the past three decades has had "no appreciable impact on entrepreneurial activity in the United States." Even at Tuck, less than 2% of graduates immediately start their own businesses.

But maybe that's not the right way to look at it. Entrepreneurs are not defined by what they do, Fairbrothers argues, but by how they do it. He views entrepreneurship as a set of traits, identifiable and measurable, and dispersed along a classic bell curve. Here he sides with Howard Stevenson and David Gumpert, co-authors of a seminal study published 25 years ago in Harvard Business Review. Entrepreneurship is not "an all-or-none trait that some people or organizations possess and others don't," the authors wrote, but rather "a range of behavior."

"So the question is," says Fairbrothers, "can you take a point on that curve and move it? If 'entrepreneurial' is to the right, can you move it that way? I know I can move it that way. I've done it."

Entrepreneurship And The Future Of The Music Industry

As you can tell by the sparing nature of my posts, I have been true to my warning that I will be posting less frequently during my GMAT preparation. However, hopefully I am also staying true to my promise that I will continue to post valuable content whenever possible. I came across a great clip on the importance of entrepreneurship within the music industry. The speaker is Ken Lopez, Clinical Professor of Music Industry at the USC Thorton School of Music. Ken provides some great insights on what it will take for those in the industry to be successful, whether they be musicians, producers, record label execs, etc.

What I really like is that Ken doesn't try to cling to the past like many in the industry. Ken not only embraces the new realities of the industry, but he is focused on teaching his students to exploit those realities. I get the sense that Ken understands what many in my generation understand and what many others in the industry fail to put into practice. He understands that the music itself may not be the deliverable that makes money anymore. He doesn't say it in so many words but I interpret him as saying that the music is your way of branding yourself, or your band, or your label. The way to make money is through entrepreneurial new ways of delivering value to the fan.

I have had a few discussions with my geographically dislocated band mates about how we would go about making a Mask of Sanity reunion successful. Many of our discussions involve thinking of new ways to monetize things the fans find valuable. Although it is about the music, technology and social norms have made the fans less willing to pay for the value that music holds. We have discussed the possibilities of giving away all the music for free, asking for a recommended donation with half going to charity, letting the customer choose what to pay for the music, etc. The idea is to get your music to as many people as possible. Anything to build the brand that is the band. Once that b(r)and is established and that community of like-minded people is created the potential to make money on other products is much greater. The ideas can range from the standard DVD release to wackier ideas like fans contributing to the actual music, but the point remains that the traditional concept of selling the music is likely dead, especially for smaller acts.

Check out Ken Lopez's video HERE!

Bill Gates and Warren Buffett: Keeping America Great

I recently DVR'd the CNBC show Bill Gates and Warren Buffett: Keeping America Great. The show has the two titans of capitalism sitting down with a crowd of Columbia students for a back and forth discussion on 'keeping America great.' It was a great glimpse into a casual discussion between these two business geniuses and a group of driven young business students parched for knowledge. The show exposed me a bit more to Bill Gates, especially in a relaxed setting. And it reaffirmed my admiration for the simplistic character based wisdom of Warren Buffett. I love the reality driven optimism of both of these guys and seeing as they are at the world's forefront in both business and philanthropy there is definitely much to be learned as a business leader and more importantly as a human being living a life of excellence. There were plenty of great questions and great responses from these two icons. I have provided some paraphrased enlightenment from the show but I highly suggest you tune in and watch the entire thing. It is well worth your time.

Was there ever a doubt about this country?
Buffett: I put my money in when we were looking into the abyss.
Gates: This country still has the best schools the best opportunities for entrepreneurs.

Do you think bad ethical business practices are the cause of the financial crisis?
Buffett: It was one of the causes but we have always had greed and we will never get rid of it. We still have a system in place that allows for a quality of opportunity that is unparalleled. Our economy is sputtering but we still have the best engine in the world.
Gates: I was a huge beneficiary of this country's willingness to place a large amount of risk and responsibility on a young person. Other countries are trying to replicate that and it is good for the world.

Mr. Gates can you tell me what you thought when Lehman went under?
Gates: I don't really follow investment banks very closely. I called Warren and asked if I should be worried? He said a little bit.
Buffett:The dominoes were fully lined up and it wasn't realized how close the Lehman domino was to the next one. However I give credit to how the government officials handled the crisis overall.

Many of the villains of this industry were in fact business school graduates. What responsibility do you think the universities like Columbia should hold?
Gates: Remember that capitalism has been enormously successful. Standard of life, medicine, etc. Business schools pay a role in developing the skills necessary to move forward.
Buffett: The best place to learn ethics is in the home. Most of us learn what we know about ethics well before we step in a classroom. It is important to emphasize them but if I had to choose between learning them in the home or the classroom I would take the home. The thing is you can succeed marvelously with ethics. It is not a hindrance at all. Look everyone here has a bright future. Look at the last two centuries. Our country doesn't avoid problems it just solves them.

What industry do you think is going to produce the next Bill Gates because that is the industry I want to get into?
Gates: Information has been the most exciting as far as what has happened. Energy and medicine also has the opportunity to rival information.
Buffett: Find what turns you on and what you have a passion for. If I would have known that Bill's industry was the next big thing I don't think I would have done too well at it. I had a teacher Benjamin Graham that I offered to work for free for and he said I was overpriced but I went that direction and had a passion for it and here I am. You will do well in whatever turns you on.

CNBC took a poll of the attendees and asked if in their lifetime they would ever see a company as transformative as Microsoft and 92% said yes. Bill do you share that belief?
Gates: Yes. Capitalism is great. You have thousands of things going on in parallel and most fail, some are mediocre, but the ones that are truly special can grow and stun everybody.

There have been a of rumors regarding your investment in Burlington Northern. Can you share the real reasons for your exposure to the railroad sector at this time?
Buffett: When I was six I wanted a railroad set and my dad didn't get it for me. Railroads are a necessity within this country. You will have more people and they will be moving more and more within this country in the next 30 years. It is the most environmentally and most cost effective way of doing that. One train will supplant 200 trucks on the road. They will play a big role in the future.

We just went through hopefully the worst financial crises of our lifetime. It has kept a lot of people up at night worrying about their future. What if anything keeps you up at night?
Buffett: I try to live my life so that nothing keeps me up at night. Last fall was really quite exciting for me. There were opportunities available that weren't the year prior. This country was going to do fine no matter what.
Gates: The financial system fortunately has a lot of self correction in it. I think there are a few things that could shake us in the future. One being a large scale terrorist attack and the other a widespread pandemic. You have to keep your eye out for a few outliers like that. I worry about our education not improving as much as it should.

The recent run up in the market has been historic with many people questioning the sustainability. Do you think the rally is for real?
Buffett: What's going to happen tomorrow huh? I bought my first stock in 1942.. Do you know when the best calendar year was since then? It was 1954 of the heels of a recession. But the point is it doesn't matter. It doesn't matter what the market does next week. What matters is whether you are buying a good stock for the money or not. Have the right long term outlook and the right evaluation of the company you are buying and a bad market is your friend. I don't care whether next week, next month or even next year does well.

What are your thoughts on Apple and the job Steve Jobs has done as the CEO of Apple? (Awkward laugh from audience and an almost pissed off smirk from Gates)
Gates: He has done a fantastic job. They are in a bit of different business but he has done well. He brought in a team and inspired them to revive a company. It is great to have competitors and of all the leaders in the industry he has proven most inspirational and he saved a company to bring them back at an incredible rate.

What is the one thing your MBA didn't prepare you for when you got into the real world?
Buffett: It prepared me very well. I was lucky that I knew what I wanted to do. I had two professors that really inspired me so that really propelled me into a field that I already loved. Right now I would pay $100,000 for 10% of the future earnings of any of you so if anyone wants to see me after. If that is true you are a million dollar asset right now. You can improve upon that by working on your communication skills. If you can improve it by 50% its another $500,000 in terms of capital value and see me after class here and i will pay you $150,000.

Mr. Gates you obviously worked very hard to get where you are. Can you share what role pure luck played in your success?
Gates: I was lucky in many ways. Lucky to be born with certain skills lucky to have parents that created an environment that was good for me and I was lucky in terms of timing. The microprocessor invention impacted me incredibly at a young age. Lucky to meet the people I have met.

You have an interesting relationship. What do you both admire most about each other?
Buffett: He admires my athletic ability. What I most admire about Bill is the view he has of what to do with the money he has amassed. As he said he was born in the right country, at the right time, with the right wiring and he was very lucky to be where he is. But in the end he knows he is the beneficiary of a tremendous society and not everyone has that opportunity. He values every human life as much as the next and he is backing it up not only with money but with his time and his wife is backing it up as well. They are going to spend the second half of their lives improving the lives of the 6 and a half billion people of the world and that is what I admire most about him.
Gates: Well with Warren there is a lot you can pick. His integrity is an example to the world, his humor. But I think I would have to pick his ability to teach. He has the ability to take things that are very complex and make them so simple so that everyone has the benefit of the experiences and work that he has put in. He loves to teach and its a real gift that I admire incredibly.

R. Glenn Hubbard the Dean of Columbia business school had the opportunity to present the question that he was most excited to ask. Warren you have said that you never know who is swimming naked until the tide goes out. That says something for knowing when the tide is going to go out but it also says something about knowing context. How do we develop and encourage business leaders who understand context and can connect the dots?
Buffett: I think they have learned alot of that in the last year and some just never learn. I think that what I learned from Ben Graham is that having sounds principles takes you through everything. They take you through the good and the bad and in the end I don't worry about it.

Has your investment philosophy on buy and hold or any of the actual processes of how you invest been impacted by the recent crisis?
Buffett: No it hasn't. We like products like this (holds up coke bottle) how is that for shameless promotion? This started in 1886 and gone through all these events and in the end there are billions of servings of coke next year and more the year after that. I own fruit of the loom too but I am not going to do a product promotion of that!

How would you recommend that an individual investor who follows the Graham and Dodd philosophy allocate their capital today?
Buffett: Well it depends on whether they are active or a passive investor. If you are going to spend a lot of time on investing then look at as many things as possible and you will find some bargains. You have to look for yourself. The world isn't going to tell you about great deals you need to find them yourself and that takes a fair amount of time. If you are not going to do that then I just advise an index fund invested consistently over time. Cash is the worst investment. Cash is not king. Find a good business and stick with it. We always keep enough cash around so I feel comfortable and can sleep at night but it is not because I like cash as an investment. Cash is a bad investment over time but you always want to have enough so that nobody can determine your future.

I actually work at Goldman Sachs so thank you for your investment.
Buffett: Well why aren't you at work?
I would like both your opinions on the development of alternative energy for getting our economy back on track?
Gates: There will be many that are dead ends. But as a nation we want to make sure that we have an environment that encourages all of them because one will eventually lead to much cheaper and better energy. There is quite a bit of R&D but not as much as I would like to see. But it is one of these areas that is emphatic by nature. There is a lot of money going in and the return on investment as a whole is actually quite low much like cars and computers etc. You get these kind of bubbles so you will have to be a bit careful to make sure that it is one that has its cost structure in line and not just pushed along by subsidies. So its a good area but not necessarily one that is great for investment.

If America was a stock would you buy it?
Gates: You bet
Buffett: On Margin!

You Have To Be A Little Bit Mad

"What is the difference between a good idea and a bad one?" That was the question asked of Canadian entrepreneur Andy Nulman in the video I came across the other day. His response, "success!" Although the answer seems fairly anticlimactic, it proves to be very insightful and powerful as Nulman goes on to describe what he has learned about the life of an entrepreneur. Nulman talks about how entrepreneur's have to be a little bit mad to do what they do because they are always going against the grain and challenging the status quo. He even goes as far as to say that if your idea is well received it is likely a bad one. There must be a chorus of people telling you that you cannot do it for it to have the potential to be a good idea.

Nulman is best known for his creation of Just for Laughs, a comedy festival in Canada, and more recently for his creation of Airborne Mobile the self described "everything else you can do with a mobile phone" company. I must admit I didn't know anything about Nulman prior to seeing this video, but his demeanor in the video and a brief scan of his blog will surely have me following the words and advice of this serial entrepreneur.....plus he's a hockey player.

You can find the full video here.

Ringing In The New Year With New Innovations!

In all the classic cartoons a great idea is illustrated by a light bulb becoming illuminated over the character's head. That clichéd visualization of an ingenious idea may in fact become a reality in 2010! In Fortune's article the Next Little Thing 2010 there are a laundry list of mind-blowing innovations set to hit the market in 2010, one involves wireless electricity making the overhead illuminated light bulb all but a reality. What fitting symbolism to usher in the new year and the truly remarkable products set to enter our lives. Here is a blurb regarding the wireless electricity technology:

A physics professor, Soljačić dug into the problem and learned that if you could get two magnetic fields to resonate -- to sing the same note, in effect -- they could transfer an electric current. With two large magnetic coils, he found a way to throw 60 watts across a room, powering a light bulb. MIT, his employer, quickly patented the technology and encouraged Soljačićto start a company.

WiTricity's 15 employees are hard at work proving that Soljačić's magnetic coils can power almost any electrical device. Most of the company's potential customers have one major question: safety.

"There's a real perceptual problem," says CEO Eric Giler. "People think we're putting electricity in the air, and that's called lightning, and they know to stay away from that."

In fact, the coils turn electricity into magnetic fields, then back into electricity. Magnetic fields interact weakly with humans; as far as the fields are concerned, we are no different from air. Giler makes a point of standing between the coils whenever he demonstrates the technology.

At the Nikkei electronics conference in Tokyo in October, he was able to power a 1,000-watt klieg light from across the room -- a far cry from that 60-watt light bulb in Soljačić's first experiment. "We're going up the power curve," he says. -Chris Taylor

A few of my other favorites include invisible speakers, new bulletproof vests and remote communication devices for police and military dogs, and recycled brewery waste fish food. Check out the slideshow here and welcome in these exciting new innovations into our lives.

Are Business Plan Competitions Good For Society?

Once held by just a few M.B.A. programs, business plan competitions are now a routine offering of universities, nonprofit groups and government offices throughout North America, Europe and lately India. They award millions of dollars in prizes and generate lots of free publicity. But some entrepreneurs have a serious question about competitions: Are they good for start-ups?

That is the question being asked in the article found on the New York Times Small Business Blog "You're The Boss." There are plenty of examples of businesses that have sprouted from college business plan competitions into successful companies; a few of which have even been featured on BadskiBlog before (i.e. Mint). However, what the article bemoans is the lack of actual data to determine scientifically if these competitions are actual good for start ups as a whole. As of now there are no comprehensive, multi-competition studies to see if business competitions help start-ups, entrepreneurs or the economy.

Many in the article express the common feeling that the competitions are more focused on teaching entrepreneurs how to seek funding. They cite that giving a staged presentation to supportive academics is much different than say, pitching to investors, executives, and skeptical investors. With that being said they do acknowledge that there is value in receiving frank feedback from peers, coaches and judges that can prepare entrepreneurs for real business situations "where they must listen graciously to potential or existing investors, consultants or customers and then decide whose advice to follow, whose to politely ignore and when to address criticism."

The real worry is that business plan competitions that are fueled by large prizes and hype encourage the new blood entrepreneurs to think that writing the plan or creating an intriguing story is the best way to bring a company into operational existence.

“You write a plan to raise money, not to figure out if you have a valid business idea,” Mr. Sommer said. “In actuality, successful entrepreneurs start by talking to customers and suppliers and test-driving their idea.”

This is where I digress from the tone of the article. Although I think their questioning whether the plans actually produce long term value adding businesses is a valid one, I think that they are focusing on two different stages of entrepreneurship. I have read some great books on entrepreneurship recently and what they all have in common is a belief that entrepreneurship has distinct stages that must be approached differently as to exploit the entrepreneurial spirit effectively throughout the life cycle of the company.

In the book Ready, Fire, Aim author Michael Masterson defines the journey from start up to mature corporations as a four stage maturing that differs immensely on the main problem, challenge, and opportunity at each stage. A stage I entrepreneur is similar to the entrepreneur at these business plan competitions. At this stage you don't really know what you are doing. Your biggest challenge is making that first profitable sale. These innovators are focused on creating an value that a customer is willing to pay for. The main opportunity at this stage is achieving a minimum critical mass of customers, or in other words proving that their idea will be appreciated and desired by the masses.

Now compare those problems, challenges and opportunities with that of the stage II entrepreneur, which is what I believe the article is focusing on when asking if the business plan competition is good for start-ups, entrepreneurs or the economy. A stage II entrepreneur is focused on fast growth. They are likely only breaking even or even losing money. Their main challenge is creating many additional profitable products quickly to ensure the growth of their business. Their main opportunity is increasing cash flow and becoming profitable!

In Peter Drucker's Innovation and Entrepreneurship he describes the difference between start up entrepreneurship and established business entrepreneurship as an entirely different concept known as Entrepreneurial Management. Drucker feels that the belief that large businesses don’t innovate is a misunderstanding. It is not size that is the impediment but the existing operation itself. He says that it takes special effort for the existing business to become entrepreneurial or in this case to remain entrepreneurial. The temptation is to always feed yesterday and starve tomorrow. Entrepreneurship is not natural and not creative; it is work and therefor a company must always ask how can we make the organization receptive to innovation, want innovation, reach for it, work for it? Innovation must be part and parcel of the ordinary, the norm, if not routine. Innovation must be foundation of individual managers success and job security and the need for innovation must be defined and spelled out, and an innovation plan with specific objectives laid out. Can you begin to see how his concept of entrepreneurial management is much different than the focus of an innovator at a business plan competition?

That is why I think the article's line of reasoning a bit off. The business plan competition is focused on the stage I entrepreneur's skill set, yet the author is measuring the success of business plan competitions against the criteria of a stage II entrepreneur. The metrics and studies that they lack would likely focus more on Drucker's entrepreneurial management than that of the traceability to a business plan competition and its impact on the success of their maturing business. Regardless I would make the claim that these competitions are successful in supporting start ups, entrepreneurs, and society as a whole because they undoubtedly provide the opportunity for some of these companies to take a run that may have never had the opportunity without the organized format of the biz plan competition. What are your thoughts? Anyone who has participated in one have any feedback?

Most Powerful Women Entrepreneurs

In partnership with American Express, Fortune searched the U.S. for outstanding female business builders. Fortune honored these game-changers at its recent Most Powerful Women Summit. From Lauren Bush to environmental innovators, here are the winners.

I love these entrepreneur lists. Fortune has compiled one for powerful women entrepreneurs and some of the stories of their successes are pretty impressive. In a recent book I read by Peter Drucker called Innovation and Entrepreneurship one of the things that really resonated with me was a statement regarding the greatest praise an entrepreneur can receive. The book said something along the lines of the greatest praise an innovator can receive is “This is obvious. Why didn’t I think of that?” It resonated with me because that is how I know a good idea when I hear about it. That feeling is so consistent when i come across great ideas, so it was great to have Drucker package it into such a digestible concept for innovation judgement. The two ideas from the list that struck that chord within me were the Sheex idea and the solar panel idea. I have included an excerpt of each below. Check out all the stories, they are definitely worth the time.

Sheex:

When they were coaching women's basketball at the University of South Carolina, Walvius and Marciniak came up with the idea to apply performance-fabric technology -- the technology that wicks moisture in Nike athletic apparel -- to bedsheets.

Crazy? Not so. Walvius and Marciniak got R&D help from the university's business school and raised $1 million for their "performance bedding" start-up. In May of last year, they quit their coaching jobs. They lined up manufacturing in California soon after, and launched Sheex.com this past April. This month, they cut a deal to sell in the NBA's flagship store in Manhattan.

Their marketing strategy is grassroots and viral, with Twitter and Facebook promos by pro athletes like the New York Giants' Steve Smith and the LPGA's Christina Kim.

Being hard-charging athletes themselves, Walvius and Marciniak are naturally inclined to race for a win. But the best advice they got? "Crawl, walk and then run," says Walvius. In business, as in coaching, she adds, "You're either getting better or you're getting worse with each day. There's no such thing as staying the same." --P.S.

SunRun Inc:

Many environmentally-minded folks like the idea of installing solar panels on their home, but find it's just too expensive.

Enter SunRun, a start-up that pays for the panels and installation; homeowners then buy solar power from SunRun at an average savings of 10% to 15% versus their current energy bill.

Jurich and her business partner started SunRun in 1997 while attending Stanford Business School. But Jurich didn't get a lot of encouragement from her classmates. "That's one of the problems of business school, is that people love to shoot down ideas, they love to say 'that's not going to work,' " she explains. But even with a job in venture capital finance waiting for her at graduation, Jurich took the entrepreneurial route.

SunRun has since raised $30 million from Accel Partners and Foundation Capital, and this week secured $90 million in tax-equity financing from U.S. Bancorp, following an earlier commitment of $105 million in project financing.

Jurich's idea also earned her a ticket to the White House: In early December, she attended a roundtable with President Obama to discuss renewable energy and ways to expand solar adoption in 2010. Her hope is that the U.S. replaces half of the $150 billion annual residential electricity market with solar power over the next two years. --J.S.

Twitter Creator's Newest Venture: Credit Card Payments By Cell Phone

Twitter creator Jack Dorsey Wednesday gave the first public demonstration of his hotly-anticipated latest venture -- a device to allow credit card payments by cell phone -- and revealed it would be given away for free.

Although the details are fairly vague it seems like a pretty cool invention. You can read the full article here. I have been waiting for something like this to hit the broad market. In fact I have been waiting since college when in an innovations class a guy and I tried to develop a credit card phone prototype. It seems pretty naive now to think that even if we developed a prototype we would have had the power and influence to bring it to market, but at the time we were pretty into it. We found a computer science guy who specialized in hardware stuff and asked him to start building a magnetic strip reader into a phone. Our innovations teacher told us to hook up with a comp sci teacher who had experience bringing a company to market within the handheld device arena. Our excitement was short lived as we found out that the comp sci instructor at the USAF Academy actually held the patent for magnetic reading devices within a handheld device. He had sold that patent along with his company to a larger company who he said probably didn’t even realize they had that patent.

Details of "Square" -- a card reader which plugs into the headphone socket of most mobile devices -- have been circulating on the Internet since it was announced earlier this month, but little has been known about how it works or who it was aimed at.

However, Dorsey -- whose microblogging Web site has proved hugely popular but not hugely profitable since launching in March 2006 -- gave no explanation on how he would make money from his new creation, beyond revealing there would be a per-transaction charity donation.

Square, a tiny cube about an inch in length, contains a magnetic strip reader that allows users to swipe and read credit cards, then deduct payment on or offline through a downloaded application that communicates with card issuers in the same way as retailer devices.

Customers then use their finger on the phone's touch-recognition screen to sign their name to the transaction.

It sounds like the Twitter creator's venture bypasses the conventional thinking of putting the reader in the phone all together by making the reader a separate attachment that works through the headphone jack. Regardless, this is something that needs to happen. I hate using cash and rarely carry it, but there are still obvious needs for cash. An invention like this one would likely eliminate many of those needs to carry cash in my opinion.

"The financial world is amazing right now because there's a clean slate. A lot of these industries are looking for something very small and innovative," he said during the gremlin-hit demonstration of his device at LeWeb, a major Internet forum in Paris.

"My co-founder is a glass artist. He sells things that people don't need -- $2,000 glass faucets. They're beautiful. If he could not take credit cards, he wouldn't make the sale because no one carries around $2,000 in the cash.

"So we looked at it. Ninety percent of the U.S. has moved to credit cards, but it's still very difficult to accept them."

"We're trying with a bunch of different profiles of folks in New York, San Francisco, LA and St. Louis, Missouri. There are piano teachers, flight instructors, and coffee shops. It can be used in a retail store like Apple, all the way down to Craigslist or paying me back for that dinner you owe me."

The Story Of Mint - How Mint Went From Garage To $170 Million

Going from garage to being sold for $170 million dollars in only a few short years is in itself an amazing story. However this post isn't meant to dazzle you with tales of huge company buyouts. This post is about providing insight into the formation and progression of a start up. The video features Mint CEO Aaron Patzer who is a self proclaimed recovering nerd. The video is kind of geared towards a tech audience but there are many lessons that transcend the type of business you are creating that I am sure will be valuable to BadskiBlog readers. At first I really enjoyed the video because it had great insight into start up challenges and the different stages of the formation of a company. Patzer focuses on cash flow and funding which are the lifeblood of a business and he offers up lessons learned and real life Mint examples. The part that got me going about this presentation was the personal side of the entrepreneur. Patzer opens up and gives a glimpse into his own personal journey through Mint's creation.

"It has been something that has been transformative for me" - CEO Aaron Patzer

Patzer goes on to say that it (the creation of a company) does for you beyond money is very gratifying. Something that really resonated with me was when he said to create something from nothing is the essence of human progress. I think people like myself who are drawn intuitively to business and entrepreneurship are really drawn to create. If I was even remotely handy I could see myself never entering a classroom again and doing some form of construction and loving it. However, I think my own personal journey will have me create more with my mind than my hands. To me that is where the video was really valuable. It was just an awesome look into the journey of the person and the struggle through the self doubts etc.

I am a user of Mint and I recommend it to everyone when we get on the topic of personal finance. I highly recommend you use it as well. As far as free goes on the internet this site may be the best there is. I have been using it for a few years now and I have seen the features grow and expand and I think it is a must have in your internet favorites for anyone who is looking for transparency in where your money actually goes, how your investments are actually doing, and what your net worth actually is. Enjoy the video and start using the site.

Mint CEO Aaron Patzer on Startups from Techcrunch on Vimeo.

Personal MBA Update - Innovation and Entrepreneurship

Personal MBA Update - Innovation and Entrepreneurship by Peter Drucker: I want to meet Peter Drucker’s book researcher. And if he did the research himself then he is even more impressive than just possessing the ability to write an incredibly insightful and practical book on a topic that is ethereal to many. Innovation and Entrepreneurship by Peter Drucker is a must read for those interested in the subject topics. Drucker, known largely for his grandiose contributions to the study of management, has written a book that lays out a practical roadmap for those who wish to advance in the fields of innovation and entrepreneurship. The reason I commented on the book researcher is that the book reads in a manner that is based entirely upon example and story. You won’t find a “step one, step two, do this, do that” book from Drucker. Every principle and axiom is centered on an example from history. He cites examples on everything from the French revolution to the Toyota production revolution. By doing so he has produced not only an entertaining book, but a guide with real practical content that allows readers to improve their ability to innovate in their existing careers or in new ventures and markets. And that is the premise of this great book. That innovation and entrepreneurship can be learned and honed like any other skill. It is not a spark of genius that manifests itself in your head outside of your own personal control. You can prepare yourself for success in innovation and entrepreneurship. Here are my notes from this classic:

Introduction: The Entrepreneurial Economy:
- Talks about how a Kondratieff or stagnating deindustrialization of the American economy is seemingly at odds with an entrepreneurial high tech America
- Says America is the only true entrepreneurial economy
- Sights that many of these entrepreneurial companies are in fact manufacturing
- The “new technology” is entrepreneurial management

The Practice of Innovation:
- Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for different business/service
- It is capable of being presented as a discipline, of being learned, or practiced

Systematic Entrepreneurship:
- Opening another restaurant is not entrepreneurship. McDonalds was entrepreneurship not in its end products but in its management concepts and techniques. They created a new market and a new customer
- Entrepreneurs create something new, something different; they change or transmute values
- Do something different rather than do better what is already being done
- The entrepreneur upsets or disorganizes or as Schumpeter would say “his task is creative destruction.”
- The entrepreneur always searches for change, responds to it, and exploits it as an opportunity
- Entrepreneurship is viewed as risky. But why? They shift resources from areas of low productivity and yield into areas of higher productivity and yield. There is the risk that they may not succeed but if moderately successful the returns should be more than adequate to offset the risk
- Its risky because so few so called entrepreneurs know what they are doing. Purposeful innovation is a systematic methodology

Purposeful Innovation and the Seven Sources for Innovative Opportunity:
- Some of the best innovation is not technical but social in nature
- Innovation used to be a flash of genius but eventually became research, a systematic purposeful activity
- Entrepreneurs have to learn to practice systematic innovation
- The entrepreneurs who start out with the big idea that they’ll make it big in a hurry can guarantee failure
- Italic section page 35
- The overwhelming majority of successful innovations “exploit change”
- 7 Sources of innovative opportunity:
Within the enterprise:
1. The unexpected – unexpected success, failure, or outside event
2. The incongruity – between reality as it is and the way it ought to be
3. Innovation based on process need
4. Changes in the industry structure or market structure that catch everyone unaware
Outside the enterprise:
5. Demographics (population changes)
6. Changes in perception, mood, and meaning
7. New knowledge both scientific and non scientific
- The lines between can be blurred and overlap, none more important or productive than the other

Source: The Unexpected:
Success:
- No area offers richer opportunities with less arduous and risky work. Yet it is often neglected or worse rejected
- Macy’s story pg 37
- It is not enough to depend on accidents, the search must be organized
- It must be seen
1. What would it mean to us if we exploited it? 2. Where could it lead us? 3. What would we have to do to convert it into an opportunity? 4. How do we go about it?
Failure:
- Rarely seen as symptoms of opportunity
- You don’t necessarily know why change is occurring just exploit it like the Ford Thunderbird
- All you need to know is something happened and that is enough to convert the unexpected success or failure into an opportunity for effective purposeful innovation
Outside Event:
- The unexpected outside event may thus be above all opportunity to apply already existing expertise to a new application, but to an application that does not change the nature of the business we are in.
- It may be an extension rather than a diversification
- The opportunity is there. It requires more than mere luck or intuition. Opportunities demand that the enterprise search for innovation, be organized for it, and be managed as to exploit it

Source: Incongruities:
- An incongruity is a discrepancy, a dissonance between what is and what ought to be, or between what is and what everyone assumes it to be
- Several kinds: 1. Incongruity between economic realities 2. Incongruity between the reality of an industry and the assumptions about it 3. Incongruity between the efforts of an industry and the values and expectations of its customers 4. Within the rhythm and logic of a process
Economic realities:
- Of all incongruities that between perceived and actual reality may be the most common

Source: Process Need:
- Opportunity is the source of innovation but necessity is the mother of invention
- With process needs everyone knows the need exists but no one does anything about it
- Innovations based on process needs require 5 basic criteria:
1. A self contained process
2. One weak or missing link
3. A clear definition of the objective
4. Specifications for the solution are clearly defined
5. Widespread realization that “there ought to be a better way” that is highly receptive

Source: Industry and Market Structures:
- Market and industry structures are quite brittle
- A change in industry structure offers exceptional highly visible and quite predictable to outsiders. Insiders perceive these same changes as threats. The outsider who can innovate can become a major factor fast with relatively low risk
- 4 nearly certain indicators of impending change in industry structure:
1. Rapid growth is the most reliable and easily spotted
2. After growth the way one perceives and services the market is likely dated
3. A convergence of technologies previously seen as separate
4. The way in which they do business is changing

Source: Demographics:
- External
- Changes in population, size, age, composition, employment, education, income
- What makes demographics such a rewarding opportunities for entrepreneurs is the neglect of others: the assumption demographics do not change

Source: Changes in Perception:
- When a change in perception takes place the facts do not change, their meaning does
- A critical problem in perception based innovation is timing

Source: New Knowledge:
- Knowledge based innovation is the superstar of entrepreneurship
- It has the longest lead time of all innovation
- They are almost never based on one factor but the convergence of many
- Requirements:
1. Careful analysis of all necessary factors
2. Clear focus and strategic position
3. Occupy a strategic position and practice entrepreneurial management
- Even with meticulous analysis clear focus and management knowledge based innovation suffers from unique risks and innate unpredictability
1. For science and tech based innovators time is working against you 2. Because the “window” is much more crowded any one knowledge based innovator has far less chance of survival
- The “shakeout” sets in as soon as the window closes and the majority of ventures do not survive
- The innovation is not enough, must focus on receptivity to it

The Bright Idea:
- Bright ideas probably out number all other categories put together yet they are the riskiest and least successful
- Bright ideas are vague and elusive

Principles of Innovation”
- Miracle cures exist but that doesn’t mean we put that in textbooks to be taught to Drs. Similarly there are innovations that don’t come from sources in previous chapters but such innovations cannot be replicated
- The do’s:
1. Purposeful systematic innovation begins with the analysis of opportunities
2. Innovation is both conceptual and perceptual; ask look and listen
3. An innovator to be effective has to be simple and focused. The greatest praise an innovator can receive is “This is obvious. Why didn’t I think of that?”
4. Effective innovations start small they try to do one specific thing
5. Successful innovation aims at leadership within a given environment
- The don’ts:
1. Try not to be clever. Innovations must be handled by ordinary humans and there are a lot of morons out there
2. Don’t diversify, splinter, or do too many things at once
3. Don’t try to innovate for the future. Innovate for the present
- The three conditions:
1. Innovation is work
2. To succeed innovators must build on their strengths
3. Innovation is an effect in economy and society
- Successful innovators are conservative. They have to be. They are not risk focused they are opportunity focused

The Practice of Entrepreneurship:
- The entrepreneurial requires different management but it still requires systematic organized purposeful management. Entrepreneurs must face up to their own rules and commitments

Entrepreneurial Management:
- Established business, public service, and startups

The Entrepreneurial Business:
- The belief that large businesses don’t innovate is a misunderstanding
- It is not size that is the impediment but the existing operation itself
- It takes special effort for the existing business to become entrepreneurial. The temptation is to always feed yesterday and starve tomorrow
- Entrepreneurship is not natural and not creative; it is work!
- How can we make the organization receptive to innovation, want innovation, reach for it, work for it?
- Innovation must be part and parcel of the ordinary, the norm, if not routine
- Innovation must be foundation of individual managers success and job security and the need for innovation must be defined and spelled out, and an innovation plan with specific objectives laid out
- Entrepreneurial Practices:
1. Focus managerial vision on opportunity
2. Generate an entrepreneurial spirit throughout the entire management group
3. Have a formal session with junior people and LISTEN for opportunities
- Measuring innovative performance is the only way entrepreneurship will become action
1. Feedback from results to expectations
2. Develop a systematic review of innovative efforts
3. Judging innovative performance against innovative objectives against performance and standing in the market and performance as a business all together
- Structures:
1. The entrepreneurial and new must be organized separately from the old and existing
2. The new must receive special focus within the organization
3. Keep the venture from burdens of normal products like ROI requirements etc.
4. Returns on innovation will be different
5. A person or component group should be held clearly accountable
- The don’ts:
1. Don’t mix managerial units and entrepreneurial ones
2. Do not innovate outside your existing field
3. Acquiring outside entrepreneurial ventures rarely works

Entrepreneurship in the Service Industry:
- Public service institutions need to be entrepreneurial and innovative as much as any business maybe more
- But it is more difficult because in the absence of profit there’s only growth in and of itself
- Most innovations are imposed by outsiders or a catastrophe
- The forces that impede entrepreneurship and innovation in a public service institution are inherent in it, integral to it, inseparable from it
- 3 reasons it is more difficult in public service:
1. Based on budget not results 2. Dependant on a multitude of constituents 3. Most important is that they “do good” and see the mission as a moral absolute vs. an economic cost/benefit analysis
- Needed policies:
1. Needs a clear definition of its mission 2. Realistic statement of goals 3. Failure to achieve means objective is wrong or defined wrongly. It then should be economic vs. moral 4. Build into policy and procedure a constant search for innovation
- Innovation for public service has become so important because public service institutions have become too big and important in developed countries

The New Venture:
- Entrepreneurial management in the new venture have 4 components:
1. Focus on the market
2. Financial foresight for cash flow and capital needs ahead
3. Top management team long before it needs one
4. A decision by the founding entrepreneur on their role
- Often focus on profits but it should be cash flow capital and controls
- A new venture outgrows its capital base with every 40-50% increase in sales

Entrepreneurial Strategies:
- Also requires practices and policies outside in marketplace

Fustest with the Mostest:
- 4 Entrepreneurial strategies:
1. Being fustest with the moistest
2. Hitting them where they aint
3. Finding and occupying a specialized ecological niche
4. Changing the economic characteristics of the product, market, industry
- Fustest requires ambition and seeks to create new industry or market. If it doesn’t work right away it is a total failure
- Hit em is creative imitation that understands the innovation better than those who created it. It is market focused and driven aimed at market dominance
- 5 reasons entrepreneurial judo works: 1. Not invented here mentality 2. Cream of market by getting the high profit part 3. Recognizing what the customer deems quality not the producer 4. Premium price is an invitation 5. Maximize instead of optimize. Try to satisfy every user through the same product or service, so there are a ton of features that satisfy no one
- Entrepreneurial judo is successful when: established leaders refuse to act on the unexpected, a new technology emerges and grows fast, or when a market or industry changes fast

Ecological Niches:
- The ecological niche aims at control, at obtaining a practical monopoly in a small area
- 3 niche strategies:
1. Toll gate strategy – makes people need your product at any price
2. Specialty skill strategy – self explanatory built around a product
3. Specialty market strategy – built around specialized knowledge of a market

Changing Values and Characteristics:
- All strategies in this chapter create a customer that is the ultimate goal or purpose of a business and economic activity
- 4 ways:
1. Creating utility 2. By pricing 3. By adaptation to the customers social and economic reality 4. By delivering what represents true value to the customer
- Great examples
- Anyone who asks “what does the customer really buy” will win the race
- Customers do not buy a product, they buy what it does for them

Conclusion: The Entrepreneurial Society:
- “Every generation needs a revolution.” – Thomas Jefferson
- Alexis de Tocqueville “Revolutions do not demolish the prisons of the old regime they enlarge them.”
- Innovation and entrepreneurship are needed in society as much as business . They achieve what Jefferson hoped to achieve without bloodshed, civil war, or concentration camps, without economic catastrophe, but with a purpose, with direction, and under control.
- We need a society in which innovation and entrepreneurship are normal steady and continuous
- 2 areas in which an entrepreneurial society requires substantial innovation:
1. Take care of redundant workers like auto industry. New businesses create new jobs.
2. The other is more radical and difficult: to organize the systematic abandonment of outworn social policies and obsolete public service institutions. Policy is human not divine and will therefore become obsolete fast, but government policy is view as being forever
- A challenge as an individual in an entrepreneurial society is the need for continuous learning and relearning.

Lightning Bolt Inspiration vs. Persistent Practice & Preparation

Does innovation have to be a lightning bolt of inspiration or can it, like any other skill, be fashioned from practice, preparation, and a consistent process? Arguments can be found leaning both ways. You can read about the belief that there are those with a born "entrepreneurial spirit" or study those who claim you can condition your "ability to innovate" almost like a muscle. CNN in the Executive Education section of their website recently posted an article on this very argument. You can read the full transcript here. The article claims that researchers have discovered "the five secrets of innovation."

Coming up with brilliant, game-changing ideas is what makes the likes of Apple's Steve Jobs so successful, and now researchers say they have identified the five secrets to being a great innovator.

Professors from Harvard Business School, Insead and Brigham Young University have just completed a six-year study of more than 3,000 executives and 500 innovative entrepreneurs, that included interviews with high-profile entrepreneurs including Amazon founder Jeff Bezos and Michael Dell, founder of Dell computers.

In an article published in December's Harvard Business Review the researchers identified five skills that separate the blue-sky innovators from the rest -- skills they labeled associating, questioning, observing, experimenting and discovering.

FIVE KEYS TO INNOVATION
Researchers say they have identified five skills that drive innovation:

Associating: The ability to connect seemingly unrelated questions, problems or ideas from different fields.

Questioning: Innovators constantly ask questions that challenge the common wisdom. They ask "why?", "why not?" and "what if?"

Observing: Discovery-driven executives scrutinize common phenomena, particularly the behavior of potential customers.

Experimenting: Innovative entrepreneurs actively try out new ideas by creating prototypes and launching pilots.

Obviously these researchers side more towards the ability to innovate being a learned trait. I would have to agree that the ability to innovate like any other skill can be learned through hard work, practice, and dedication. However, I also acknowledge the fact some people hit the genetic lottery while others are well....not so fortunate. I think that like most things even an absent disposition can be overcome if the desire is there. I think more and more business minds are starting to lean in the direction of this line of thinking. I am currently reading Innovation and Entrepreneurship by business hall of famer Peter Drucker in which the entire premise of the book is calculated implementation of innovation and entrepreneurship. I will go into more detail of my thoughts on the book after its completion, but the one thing that really stands out is Drucker's ability to use actual stories and examples to illustrate his views and principles. Badskiblog readers are also familiar with another book I read recently by Twyla Tharp called the Creative Habit, which held a very similar view on creativity although presented in a very different manner than Drucker.

One of the men behind the study, Insead's Hal Gregersen, told CNN, "What the innovators have in common is that they can put together ideas and information in unique combinations that nobody else has quite put together before."

The researchers describe this ability to connect ideas as "associating," and say it's key to innovators' ability to think outside the box. But they add that the secret to how the great innovators think is the way they act.

"The way they act is to observe actively, like an anthropologist, and they talk to incredibly diverse people with different world views, who can challenge their assumptions," Gregersen told CNN.

Because the ability to think differently comes from acting differently, Gregersen says anyone can become a better innovator, just by acting like one.

"Studies have shown that creativity is close to 80 percent learned and acquired," he told CNN. "We found that it's like exercising your muscles -- if you engage in the actions you build the skills."

I love the way they describe what true innovators do...they recognize unique patterns that others don't see. I like that describe them as anthropologist-esque. Entrepreneurs seek to satisfy wants or create wants that consumers didn't know they had. Innovators ability to satisfy wants typically rests firmly upon their ability to recognize patterns amongst the most complex study known to man; the study of man. It is a very insightful and great way to look at what entrepreneurs actually do. What are you doing to hone your innovation acumen?

Taking Good From The Bad: The Emergence of Entrepreneur MBA's

During the recession of the last year or so all the chicken little's have been screaming that the sky is falling. It was supposedly the end of the world that the market took a dive. I must admit that things get a little scary when banks start failing, and even scarier when we as taxpayers are left to foot the bill while the government cherry picks which companies are "too big to fail" and which aren't. However I have written before that not only are economic downturns a perpetual reality but that they are a necessity. Not only did the recession present one of the greatest buying opportunities of our time, but it also has changed behaviors on a grand scale that would not have changed without of little push from market forces (hint: consumer debt, lending practices, etc.). However, not all the fallout from the downturn is arm twisting change. I found this article in BusinessWeek regarding the increase in start up companies coming out of MBA programs.

Business schools have quietly become the back door to starting your own business. Once considered merely the hallway to a high-salaried career with an investment banking or consulting firm, business schools are now drawing attention from those
tinkering in their garages and hoping to find the next big thing. Through virtual and traditional business incubators, business schools are helping students launch startups with everything from fund-raising and networking to finding office space and interns.

Innovation and entrepreneurship have always been the driving force behind the small business fueled American growth. It is great to see that a positive outcome can come from such a seemingly negative financial period. These incubators and business plan competitions that are springing up at campuses nationwide are really cool. When I was taking an innovations class
at the United States Air Force Academy (yes, even they are teaching innovation) we had the CEO of an incubator in Boulder come and talk about what they do and it was really impressive. They also talked about the business plan competitions and a few groups even went and participated. I tend not to regret too many things in life but I really wish I would have sucked it up and participated in one of those competitions. I did get the chance to do a mock competition where prominent startup figures in the area came to our department and served as judges alongside faculty as guest judges which served as our final grade in the class. Great experience that I am sure it magnified tremendously with the opportunity to actually carry out your business plan and even be given money to make it happen.

"Rather than creating the next generation of employees, we want to create the next generation of employers," says Ted Zoller, associate professor and executive director of the Center for Entrepreneurship at the UNC Kenan-Flagler Business School.

As bonuses disappear and pink slips fly in increasing numbers, entrepreneurship-the nitty-gritty kind where men and women with dreams roll up their sleeves, get their hands dirty, and work hard to make something of nothing-is becoming the new MBA lifestyle. Business schools are impressing upon students that taking on this new ideology behooves all MBAs, even those
in traditional industries. "Entrepreneur is not just a job title," says Arthur A. Boni, director of the Donald H. Jones Center for Entrepreneurship at Tepper. "It's a way of thinking and acting. All people are required to innovate, whether in a startup or a big company. Especially in a recession, everybody needs to be more innovative."

Well said. In the new era of business where the possibilities for exploiting and creating new markets are seemingly endless, there is so much more to getting a first class business education than accounting and organizational culture. It is great to see that although the last year has been painful for many, it is in fact bettering the future of the way we do business.

Personal MBA Update - Ready, Fire, Aim

The Personal MBA Update - Ready, Fire, Aim by Michael Masterson: This book was awesome. Plain and simple. It was one of the best books I have read on the topic of entrepreneurship. It wasn't just a touchy feely go out and do it type book. The book had great lessons and practical advice on how to best achieve entrepreneurial success, not just as a start up but as you mature your business. I particularly like the books focus on selling, marketing, and strategies for increasing profits. I found myself testing my own random business ideas against the criteria and recipes for success of this book to see if I truly have good ideas and more importantly if the ideas have the potential to make money. For me I felt as though I took more out of the first stage entrepreneur advice, but that is probably because that is the stage I am trying to reach. I think that the book could prove valuable to business owners and executives alike as it also offers practical advice for those seeking to grow their business and move it into the next stage of business maturity. This is one of those books that I may not remember all the great lessons packed inside, but when I go to start a business the book will be one of the first resources I grab to ensure that I am focusing my efforts for success.

Whether you're thinking about starting a new business or growing an existing one, Ready, Fire, Aim has what you need to succeed in your entrepreneurial endeavors. In it, Masterson shares the knowledge he has gained from creating and expanding numerous businesses and outlines a focused strategy for guiding a small business through the four stages of entrepreneurial growth. Along the way, Masterson teaches you the different skills needed in order to excel in this dynamic environment.

While some of the concepts covered may seem novel, all of them have been proven to work time and again. Among other things, you'll discover:

Why selling is your first business priority and the one thing you should never stop doing

The handful of numbers that are critical to every business

When to cut your losses short and when to let your winners run

The front-end/back-end method of doubling profits easily

Why having a Plan B is as important as Plan A, and when and how to create it

The difference between pushers, thinkers, organizers, and sellers, and how to attract the ones you need for your business

Over the course of his remarkably successful career, Michael Masterson has helped start and develop dozens of multimillion-dollar businesses, including one whose revenues exceeded $135 million and another still growing at $300 million. Now, with Ready, Fire, Aim, he'll show you how to make your way to the top by designing powerful marketing campaigns that will regularly outsell your competitors; implementing innovative operational procedures that will reduce costs and hassles; and using the revolutionary power of the Internet to reduce customer complaints and increase profits.

To start and grow multimillion-dollar businesses over and over again you have to master certain skills. Ready, Fire, Aim reveals what those skills are and shows you how to quickly master them. Filled with in-depth insights and expert advice, this remarkable guide for entrepreneurs gives you a blueprint for business and financial success that will allow you to enjoy life to its fullest.

Here are my notes from the book:

Part I: Being all that you can be
Introduction: The very best job in the world:
- Three most important decisions in life are 1. what you do 2. where you do it 3. with whom you do it Plus #4 when you work and when you don't
- no consideration is more important that who you work with

Getting to the next level:
- The four stages of business development: 1. Starting out zero to $1M 2. Fast growth 1 to $10M 3. Adolescent stage 10 to $50M 4. Maturing state 50 to $300M
- Stage I:
main problem - you don't really know what you are doing
main challenge - making the first profitable sale
main opportunity - achieving a minimum critical mass of customers
- Stage 2:
main problem - you are only breaking even or losing money
main challenge - creating many additional profitable products quickly
main opportunity - increasing cash flow and becoming profitable
- Stage 3:
main problem - your systems are strained and customers are noticing
main challenge - turning the chaos into order
main opportunity - learning how to establish useful protocols and manage processes and procedures
- Stage 4:
main problem - sales slow down or stall
main challenge - becoming entrepreneurial again
main opportunity - getting the business to run itself

Why Employee Size Matters:
- 4 Stages: 1-7-49-344 Employees

Becoming a five star business genius:
- For a business to grow to $100M-$300M it must be good if not great in these areas: 1. coming up with new and useful product ideas 2. selling those products profitably 3. managing processes and procedures efficiently 4. finding great employees to do the work 5. getting people, procedures, products, and promotions going
- To successfully start a business all you need is to 1. know how to make a sale 2. be able to put that sales process into action
- Natural inclinations of an entrepreneur: 1. They are attracted to challenges 2. they enjoy being in leadership roles 3. they are passionate about their ideas
- Natural skill of entrepreneurs: 1. well organized 2. good analytical thinkers 3. they are good at sales 4. good at taking initiative
1. coming up with ideas
2. selling products
3. managing systems
4. developing superstars
5. taking action

Part II: Stage One: Infancy
The supremacy of selling:
- without sales it is very hard to sustain an ongoing business
- Jim Koch and the Sam Adams story
- 4 aspects of entrepreneurial success: 1. A seller: someone to market the product 2. An improver: someone to improve the product 3. An organizer: someone to make sure things flow smoothly 4. A pusher: someone to get people to do what they are supposed to do
- Priorities should be:
1. selling 2. pushing 3. improving 4. organizing
- There is a direct relationship between the success of a business at any given time and the percentage of its capital, temporal, and intellectual resources that are devoted to selling
- Stage I business priorities: 1. get the product ready enough to sell it but don't worry about perfecting it 2. sell it 3. then if it sells make it better
- Making the first sale is critical for two reasons: 1. you need to create cash flow to keep your business going 2. you will never know whether your unique selling proposition (USP) is good until you test it in the marketplace
- The sooner you learn the answer the better and less costly!

Your optimum selling strategy and the 4 fundamental secrets of selling your first product:
- Your optimum selling strategy (OSS): 1. Where are you going to find your customers? 2. What product will you sell them first? 3. How much will you charge for it? 4. How will you convince them to buy it?
- Best advice: Do what everyone else is doing! In the beginning at least.
- How to pick a start up product: 1. What products are hot? 2. Determine if your product fits that trend 3. If yes you are set to go if not go to 4 & 5. 4. Come up with me too product versions of several hot products 5. Improve them in some way by adding features or benefits the originals lack.

Mastering the copy side of selling:
- 4 marketing concepts: 1. The difference between needs and wants 2. Difference between features and benefits 3. How to establish a unique selling proposition (USP) 4. How to sell the USP
- USP: 1. Make it some way better 2. Make it seem better
- quote page 100
- 3 aspects of a solid USP: 1. The appearance of uniqueness 2. The big promise 3. Specific claims 4. Proof of those claims
- advertising cheat sheet on page 107

Secondary yet important priorities for stage one businesses:
- Mentoring and being mentored
- Teaching your team
- Setting business targets
- Page 117 last paragraph

A quick review of the problems, challenges, and opportunities faced by the stage one entrepreneur:
- Don’t waste your time on corporate marketing, sell your product not your company
- Don’t waste your money on invisible (to your customers) business extras like office space, furnishing, equipment and the like
- Don’t be misled by phony business experts
- Be proud of your business acumen not arrogant about your business ideas
- Ask advice from smart people
- Don’t ever believe you know more than the market
- Make sales your company’s top priority
- Learn everything you can about sales and marketing
- Discover the optimum selling strategy
- Understand how pricing and other aspects affect sales
- Give you marketing team one and a critical mass of qualified customers
- If possible use direct mail or email to discover OSS
- In testing price to determine OSS favor the down side
- Don’t invest a lot of inventory before you have figured out OSS

Stage II Childhood:
From $1M to $10M and beyond:
- “Innovation distinguishes between a leader and a follower,” – Steve Jobs
- If you get caught in stage I you have a self employment company vs. equity business
- Every time your business changes so must its leader – YOU
- Most companies that go from 1M to 10M do so within 5 years. Why so quickly? Because they made the fundamental change from 1 product to marketing many products.
- Aggressive proliferation of new products
- The primary factor in stage II growth is the development and marketing of new products. The faster you can develop and sell those new products the fast your business will grow
- Front end sales come from those people who have never bought anything before
- Back end sales come from existing customers
- The purpose of front end is to get a new customer the back end is to produce a profit
- Axiom page 144

Innovation is the key to second stage growth:
- Innovation is rarely new its noticing trends and getting ahead of them to create the tipping point
1. The secret to breaking into new markets or reviving a flagging business is to create tipping point products
2. The secret to creating them is to find hot products in rising markets and come up with some way to make them new and different
3. You can make lots of money on the back end with ordinary products as long as you sell them to existing customers
- quote pg 154 at bottom
- New product ideas: work as a member of a team. Don’t fly solo
- Formula of creative brainstorming:
1. A quorum of three: 2 is better than one 3 is better than 2
2. A maximum of 8: there is a limit to the number of people who can effectively operate
3. A limit of time: Parkinson’s law
4. Established goals: what is your specific objective
5. High standards: keep asking how can we improve upon that?
6. A code of equality
7. Strict rules: a. specific suggestions b. no specific criticism c. be positive d. encourage the weak and cut the windbags short
8. A culture of creativity
- Magic Product cube: cubes have 3 dimensions 1. Price – inexpensive, moderate, expensive 2. Product type – golf clubs, golf paraphernalia, golf balls 3. USP – you have 3 golf pros who will endorse you Tiger etc. This means you have 3X3 or 27 possible products
- The 24 hr rule for preserving the inspiration of genius 1. The entire brainstorming session must be tape recorded 2. When a tipping point idea is suggested a short advertising piece must be written in 24 hrs.

Speed:
- When innovation and speed are combined the results can be astonishing
- 80% of G=IV2 where G= second stage growth I= innovation V= velocity
- Axiom page 168
- Innovators should be passionate about: love good ideas, hate sluggishness, enjoy the process
- “money loves speed”
- Accelerated failure and ready fire aim
- By accelerating failure we can accelerate success. Over time increase success vs. failure
- 8 guidelines to speed up implementation of good ideas: 1. Explain the key concepts 2. Support management 3. Walk the walk 4. Establish parameters 5. Get agreement 6. Accelerate gradually 7. Provide support as you go 8. Follow the program

Getting Ready:
- Ready questions: 1. Do I have a good idea 2. Does it feel like it will work? 3. Are my sales targets real? 4. Can I afford to test the idea? 5. Do I know the basic tasks that need to be done? 6. Do I have the people who can do them? 7. Do I have plan B an exit plan in case my good idea is a bad one?
- quote 183
- gut instincts are really subconscious suggestions that arise from all the patterns we’ve observed. They will tell us more than we can logically know because they represent more information that our brains can logically process.
1. Ask yourself how much it will logically cost to make the product come to life. Take that and double it
2. Figure out how many units it will sell and cut it in half
- Ready Aim Fire business proposal pg 193

What are you waiting for? Get started already:
- 2 reasons most good ideas never get implemented: 1. A desire for perfection 2. Little chores

Aiming the product:
- Ready aim fire ultimately results in higher quality products because there is less money and time wasted on features, mechanisms, and details that customers don’t really care about
- Fewer resources at the ready stage means more available at the aim stage
- A tale of incremental degradation – the candy example page 210
- Business people fall into two categories. Those who believe the universe is limited and disconnected and those who believe its unlimited and interconnected. One hoards and one expands.
- The golden rule or the rule of gold
- Remember that most of your profits will come from back end products which means the easiest way to grow your company is to develop long term relationships with customers and good products
- If it ain't broke….fix it. By broke I mean sales. Trash ones that don’t sell and fix the ones that do sell.

Aiming the Marketing Part I:
- Step I: Exercising the righteous demons
- Myth 1: it is good to sell things that people need, like grain and milk, but it is bad to sell things that people don’t need like TIVOs and gambling vacations
- Reality: More than 90% of what people buy is based on wants not needs
- Myth 2: It is good to sell things as long as you don’t charge much more than they are worth
- Reality: What does value really mean?
- Myth 3: It is good to make good things better but it is bad to sell them
- Reality: Give me a break
- “Don’t be ashamed of doing to thy neighbor which you secretly want done to you.” Golden rule of Marketing Genius is treat your customer as you want to be treated.
- Step 2: Shooting revenues through the roof with 3 basic approaches:
1. You can sell the product to more people
2. You can get your customers to buy more products
3. You can charge more for the products you sell
- Customer service made easy and profitable:
1. Knowing what customers really want
2. Finding out how you can do that for them
3. Talking to them about what you are happy to do
- Step 3: A crash course in sales and marketing
1. Your customers don’t care about you or your business. They are about themselves
2. A small portion of your customer base is giving you the lion’s share of profits
3. Understand why your customers buy from you
a. to feel good about themselves
b. to solve a problem
4. Almost every sales transaction begins with the process of generating leads
5. Learn multichannel marketing
6. Follow the golden rule of marketing genius: treat your customers as you want to be treated
7. Understand the secret of the four legged stool:
a. the big idea b. the big benefit c. the big promise d. proof
8. Understand that customer complaints and objections are the key to selling better
9. Maintain a “no dead end” policy regarding your products. Every sale is a link in a system of links that go on forever
10. Take advantage of customer inertia. Establish a bill til forbid relationship
11. Understand the 80/20 rule
12. Understand the USP of each product
13. Every product line needs its own branding
14. Never lose your marketing edge
15. understand the secret of the core complex. Think of your customers personality as an onion
16. Practice reciprocity with your customers
17. Understand that intimacy is the key to a customer’s lifetime value to your business
18. Be confident and enthusiastic when you sell
19. Don’t push or bribe your customers
20. Develop and mature a marketing culture that emphasizes 3 sentiments: providing benefits to the customer is the heart of product development, providing value is the heart of sales transactions, sincerity is the heart of all communications.

Aiming the Marketing Part 2:
- Understand the buying frenzy
- Increase your profits by stimulating your customers natural wants and turning them into a buying frenzy
- If you convince a customer to buy when they need it you have a loyal customer but if you can persuade him to buy every time that he wants it then you have a human ATM.
- The Law: The likelihood of a customer buying a product is inversely related to his need for it.
- The Corollary: The less a customer needs a product the more likely they are going to buy it.
- 3 factors that stimulate buying frenzies: 1. Feeling like I have more money than I need 2. Being exposed to psychologically effective selling signals 3. Good feeling from buying.

Ready Fire Aim in action:
- various stories

A quick review of the problems, challenges and opportunities faced by the stage 2 entrepreneur:
- Pages 272-277

Making the Stage III Transformation:
- In stage II new employees are added by subordinates creating a communication gap for the first time.
- Corporate execs are different than you but you need them because you can’t change your company without them
- The rule of 3! Each manager should be required to give you only 3 numbers month
- 1. Change yourself. 2. Change or hire great people to run your business

Change into a Corporate Leader:
- Six skills for a Stage 3 business: 1. Controlling operations 2. Managing your managers 3. Communicating your vision 4. Networking for joint ventures 5. Negotiating deals 6. Being good at hiring

Filling your Stage III business with stars and superstars:
- Myths and realities:
- Myth: Employees need job descriptions to know the scope of their responsibilities
- Reality: Job descriptions are not necessary
- Myth: Employees are always motivated by money
- Reality: Money isn’t even the second most important motivating force
- Myth: To win loyalty you must make them owners
- Reality: Most don’t want to be business owners
- Myth: Flat organizations create happier and more effective employees
- Reality: Employees like hierarchy
- Myth: Make work fun by filling it with amusements
- Reality: Fun comes from good work not from distractions
- Myth: A good boss is a sensitive boss willing to respond to personal problems
- Reality: Mixing business with friendship is always a bad idea
- Myth: A good boss listens to employee complaints and responds to them
- Reality: Some complaints are better ignored

Bottlenecks, Bureaucracy, and Politics:
- Terms page 322
- Ostensibly politics and business have the same purpose: go make the world a better place. But their methodology is different. Politicians don’t start doing good until they get their power. Business people can’t get their profits until they do their good.
- Quote pg 332

A quick review of the problems, challenges, and opportunities faced by the Stage III entrepreneur:
- Pages 334-337

Part Five: Stage IIII Adulthood
The last big change:
- Opportunities: 1. Selling your business privately 2. Bringing it public 3. Stepping back and becoming chairman of the board
- Role I: The employer role
- Role 2: The manager
- Role 3: The business builder
- Role 4: The wealth builder

Acting as your company’s main investor:
- Bottom line page 356